Politics of election economies concerning theory of political business cyles (PBCS) during the post-1980 period in Turkey

Contrary to eliminate the fluctuations on the time series by utilizing the macroeconomic policies, the idea of these policies causing the fluctuations has been an essence of political business cycles theory. The justification for this thought bases on the idea that politicians manipulate the economy concerning the voters' requests to maximise their votes or to minimize losing votes pre election. These manipulation politics called as politics of election economics. Arguments regarding the politics of election economics in Turkey primary started by the intervention of the government on agricultural products. Through the course of time, the arguments covered the major macro variables effecting the direction of monetary and budgetary politics, and scattered over a wide area from the outcomes of inflation- unemployment rates to money supply-budget balances. In this study, the politics of election economics have been analyzed by the monthly data covering the period of 1987:01-2001:04. For this purpose, common techniques mainly utilized in the literature from one equation (Arima) to system equations (VAR and SUR) have been employed in the study. Six macro variables -interest rate, general price level, money supply, exchange rate, industrial production index, consolidated budget balance- have been utilized in the system equations. Additionally, each system equation has been re established and estimated by replacing consolidated budget balance by non-interest budget balance, expenditures, non-interest expenditures, other current expenditures, personnel expenditures, investment expenditures and other transferred expenditures. Both single equation and system equation approaches strongly imply that instruments concerning general price levels and budgetary variables have been employed for the politics of election economics. The effects of election economics on the money supply has only been determined by single equation approach.