Political business cycles and application of traditional opportunistic model to Turkey (1950-2013)

Changes in economic indicators due to the political reasons during election periods are called political business cycles. Political business cycles theories depend upon the idea that the ruling party acting with the motivation of vote maximization accelerates economic cycles instead of moderating them via macroeconomic policies. It is thought that economic indicators behave simultaneously with business cycles since the ruling party elites produce policies that tackle with unemployment before election and with inflation after election to come to power. The aim of this thesis is to investigate whether or not there are political business cycles in Turkey in terms of traditional opportunistic business cycles model. For this end, the consistence among selected economic variables in 16 general elections and 12 local elections held during 1950-2013 period has been tested with ratio analysis method. General budget receipts and expenditures, M2 money supply and municipality budget receipts and expenditures are used as political tools and inflation, unemployment and GDP as political outcomes. Yearly changes in economic indicators are analyzed with respect to five different periods, namely 1950-1959, 1960-1979, 1980-2000, 2001-2013 and 1950-2013. The details in sub-periods and indicators are given in the text. The findings of the analysis are compatible with the theory at the rate of 56,25% for the 1950-2013 analysis that covers whole analysis period. It is interesting that this rate is the same for general and local elections. Key Words: Political Business Cycles, Election Economy, Traditional Opportunistic Model, Turkish Economy, Political Conjuncture