, Columnist
Politicians Can’t Rig the Economy Like They Used To
The ability of elected officials to influence economic conditions appears to be waning — as is the importance of those conditions to politics.
Proof of the failure of political business cycle theory.
Photographer: Alex Wong/Getty Images
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In economics as in life, success sometimes lies in knowing when to discard previous victories. I have in mind something called “political business cycle theory.”
Political business cycle theory postulates that elected officials will use monetary and fiscal policies to try to swing elections in their favor. While they do not usually control the money supply, they can pressure central bank officials toward that end.