Abstract
Economic reforms since the 1980s resulted in weaker wage growth and the retrenchment of the welfare state. Labor’s declining share of income in conjunction with consistent asset price inflation, created an environment where the electorate increased its demand for credit to which politicians, driven by opportunistic re-election motives, respond positively. The empirical findings suggest that politicians, irrespective of their ideology, introduce policies and manipulate credit growth to maximize their re-election prospects. Moreover, the results indicate that partisan politics in Australia have become less pronounced, suggesting an ideological convergence of the two major political parties with respect to credit.
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