Political business cycles, democratization, and economic reform: the case of Africa

Abstract

This paper presents cross-country evidence that political business cycles are alive and well in the nascent democracies of the developing world. Africa provides fertile ground for the study of political business cycles. This paper uncovers systematic electorally timed interventions in five monetary and four fiscal policy variables in a panel of African countries. These findings are consistent with the predictions of rational opportunistic political business cycle theory. If Africa's increasingly frequent elections are associated with reversals of fiscal and monetary policy reform, there is a potential conflict between political and economic reform.