This book considers the interrelation among macroeconomic politics, macroeconomic policymakers, macroeconomic policies, and macroeconomic perform ance. This interaction is examined using the expectational Phillips curve model, which measures macroeconomic outcomes in terms of inflation and unemployment. The subject of macroeconomic politics mainly focuses on voter behavior, presidential re­election ambition, and political party priorities. These political factors influence the macroeconomic policy actions of the president, Congress, and the central bank; the analysis takes into account both fiscal and monetary policies. The author’s examination of citizen sentiment is based on rational voter theory and the median voter model. He compares the effects of macroeconomic farsightedness versus shortsightedness in voters and contrasts the conservative versus liberal perspectives on macroeconomic policy and performance. The empirical component of the analysis examines the electoral and partisan political business cycle effects upon the U.S. economy, and evidence of idiosyncratic effects during the time frame of 1961–2014 is found. Finally, the author discusses macroeconomic influence on various measures of voter sentiment, such as presidential job approval, and presidential and congressional election outcomes.

First published in 1990. Routledge is an imprint of Taylor & Francis, an informa company.

Originally, economics was called political economy, and those studying it readily accepted that economic decisions are made in a political world. But economics eventually separated itself from politics to pursue rigorous methods of analyzing individual behavior and markets. Recently, an increasing number of economists have turned their attention to the old question of how politics shape economic outcomes. To date, however, this growing literature has lacked a cogent organization and a unified approach. Here, in the first full-length examination of how political forces affect economic policy decisions, Allan Drazen provides a systematic treatment, organizing the increasingly influential "new political economy" as a more established field at the highly productive intersection of economics and political science. Although he provides an extraordinarily helpful guide to the recent explosion of papers on political economy in macroeconomics, Drazen moves far beyond survey, giving definition and structure to the field. He proposes that conflict or heterogeneity of interests should be the field's essential organizing principle, because political questions arise only when people disagree over which economic policies should be enacted or how economic costs and benefits should be distributed. Further, he illustrates how heterogeneity of interests is crucial in every part of political economy. Drazen's approach allows innovative treatment--using rigorous economic models--of public goods and finance, economic growth, the open economy, economic transition, political business cycles, and all of the traditional topics of macroeconomics. This major text will have an enormous impact on students and professionals in political science as well as economics, redefining how decision makers on several continents think about the full range of macroeconomic issues and informing the approaches of the next generation of economists.

Political macroeconomy refers to the interconnection between macroeconomic politics and macroeconomic performance. The expectational Phillips curve may be used to examine the economic aspects of this interrelation. Macroeconomic politics relates to voter behavior, presidential reelection ambition, partisan economic priorities, and special interests. These factors impact the fiscal and monetary policy actions of the president, Congress, and central bank. According to the electoral effect, presidents attempt to boost the economy before an election to increase reelection votes. According to the partisan effect, conservative presidencies are relatively inflation averse, while liberal administrations are relatively unemployment averse. The evidence, however, suggests that the electoral and partisan effects occurred idiosyncratically in the U.S. economy during 1961–2016. The economy also affects presidential approval, Congressional elections, consumer sentiment, voter participation, and macropartisanship. An international dimension of the political macroeconomy is the issue of free trade versus protectionism and the perspectives of economic liberalism, neomercantilism, and structuralism.

Examines why some countries have much higher unemployment rates than others. Explores wage bargaining institutions, macro-economic policy regimes, and the welfare state. Argues that unemployment is the outcome of interaction between the centralization of the wage bargaining system and the character of the monetary policy regime.