Transcript 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).

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).
Monetarism
MV = PQ
18-30 months
In the short run, increases in M
affect Q---but only temporarily.
Monetarism
MV = PQ
In the short run, increases in M
affect Q---but only temporarily.
Monetarism
MV = PQ
In the short run, increases in M
affect Q---but only temporarily.
Monetarism
MV = PQ
In the short run, increases in M
affect Q---but only temporarily.
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.
The Political Business Cycle
1972 Nixon vs. McGovern
PBC game (good timing)
1976 Ford vs. Carter
1980 Carter vs. Reagan
1984 Reagan vs. Mondale
PBC game (good timing)
1988
1992 Bush vs. Clinton
1996 Clinton vs. Dole
2000
2004 Bush vs. Kerry
PBC game (good timing)
The Political Business Cycle
1972 Nixon vs. McGovern
PBC game (good timing)
1976 Ford vs. Carter
1980 Carter vs. Reagan
1984 Reagan vs. Mondale
PBC game (good timing)
1988
1992 Bush vs. Clinton
1996 Clinton vs. Dole
2000
2004 Bush vs. Kerry
PBC game (good timing)
The Political Business Cycle
1972 Nixon vs. McGovern
PBC game (good timing)
1976 Ford vs. Carter
Didn’t play the PBC game
1980 Carter vs. Reagan
PBC game (too early)
1984 Reagan vs. Mondale
PBC game (good timing)
1988
1992 Bush vs. Clinton
PBC game (too late)
1996 Clinton vs. Dole
PBC game (good timing)
2000
2004 Bush vs. Kerry
Couldn’t play the PCB game
The Political Business Cycle
1972 Nixon vs. McGovern
PBC game (good timing)
1976 Ford vs. Carter
Didn’t play the PBC game
1980 Carter vs. Reagan
PBC game (too early)
1984 Reagan vs. Mondale
PBC game (good timing)
1988
1992 Bush vs. Clinton
PBC game (too late)
1996 Clinton vs. Dole
PBC game (good timing)
2000
2004 Bush vs. Kerry
Couldn’t play the PCB game
The Political Business Cycle
1972 Nixon vs. McGovern
PBC game (good timing)
1976 Ford vs. Carter
Didn’t play the PBC game
1980 Carter vs. Reagan
PBC game (too early)
1984 Reagan vs. Mondale
PBC game (good timing)
1988
1992 Bush vs. Clinton
PBC game (too late)
1996 Clinton vs. Dole
PBC game (good timing)
2000
2004 Bush vs. Kerry
Couldn’t play the PCB game
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.
Monetarism
And the Political Business Cycle