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Monetarism And the Political Business Cycle. Monetarism MV = PQ 18-30 months In the long run, increases in M affect nothing but P (and W).

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Presentation on theme: "Monetarism And the Political Business Cycle. Monetarism MV = PQ 18-30 months In the long run, increases in M affect nothing but P (and W)."— Presentation transcript:

1 Monetarism And the Political Business Cycle

2 Monetarism MV = PQ months In the long run, increases in M affect nothing but P (and W).

3 Monetarism MV = PQ months In the short run, increases in M affect Q---but only temporarily.

4 Monetarism MV = PQ In the short run, increases in M affect Q---but only temporarily.

5 Monetarism MV = PQ In the short run, increases in M affect Q---but only temporarily.

6 Monetarism MV = PQ In the short run, increases in M affect Q---but only temporarily.

7 The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale 1988 Bush vs. Dukakis 1992 Bush vs. Clinton 1996 Clinton vs. Dole 2000 Gore vs. Bush 2004 Bush vs. Kerry Now, pick the elections in which one of the candidates was the sitting president.

8 The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale Bush vs. Clinton 1996 Clinton vs. Dole Bush vs. Kerry PBC game (good timing)

9 The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale Bush vs. Clinton 1996 Clinton vs. Dole Bush vs. Kerry PBC game (good timing)

10 PBC game (good timing) The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale Bush vs. Clinton 1996 Clinton vs. Dole Bush vs. Kerry PBC game (good timing) Didn’t play the PBC game PBC game (too early) PBC game (good timing) PBC game (too late) PBC game (good timing) Couldn’t play the PCB game

11 PBC game (good timing) The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale Bush vs. Clinton 1996 Clinton vs. Dole Bush vs. Kerry PBC game (good timing) Didn’t play the PBC game PBC game (too early) PBC game (good timing) PBC game (too late) PBC game (good timing) Couldn’t play the PCB game

12 PBC game (good timing) The Political Business Cycle 1972 Nixon vs. McGovern 1976 Ford vs. Carter 1980 Carter vs. Reagan 1984 Reagan vs. Mondale Bush vs. Clinton 1996 Clinton vs. Dole Bush vs. Kerry PBC game (good timing) Didn’t play the PBC game PBC game (too early) PBC game (good timing) PBC game (too late) PBC game (good timing) Couldn’t play the PCB game

13 And the Political Business Cycle If you play the PBC game and get the timing right (Nixon, 1972; Reagan, 1984; and Clinton; 1996, you’re likely to win. Otherwise, you’re likely to lose.

14 Monetarism And the Political Business Cycle


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