On the Importance of Elections and Ideology for Government Policy in a Multi-Party System

Abstract

Politico-economic models are meant to capture in a quantitative way some important aspects of the relationship between the economy and politics, and so to contribute to the development of a positive theory of government behaviour. A distinction can be made between “reaction function models”, “popularity models”, and “interest group models”. The first group of models is engaged in the estimation of the relationship between instruments of government policy, mainly fiscal policy, but also monetary policy, and the state of the economy measured by variables such as inflation, unemployment and the growth of personal income (see Alt and Chrystal (1983) and Mosley (1984)). The most important shortcoming of these models is that a behavioural-theoretic underpinning of the found relationships is missing (the facts axe supposed to speak). Popularity models particularly focus on the relationship between government (politicians, that is) and voters. An interesting model seems to be the one developed by Frey and Schneider (1978a, 1978b, 1979, 1982), which will be discussed in the next section.