Political business cycle theories, traditional opportunistic model example of Türkiye

There are two different approaches to the use of expectations in the analysis of the Political Cycle Theory of fluctuations. Approaches created by accepting adaptive expectations are called traditional approaches, while approaches created by considering rational expectations are known as modern approaches. Both approaches have sub-divisions within themselves as Opportunistic and Partisan approaches. In the opportunistic model, politicians manipulate the economy for their own benefit in order to increase their changes of being elected. While following policies that increase aggregate demand before the elections, they make policy changes to reduce the inflationary pressures that arise after the elections. The main thing in the partisan model is to meet the demans of the supportive electorate. Politicians try to win their votes by implementing policies towards them. The implementation of these policies leads to political conjuncture fluctuations. In this study, the existence of the traditional opportunistic model in Turkey has been tested the context of the political business cycle theory. In this direction, the 2007, 2011, 2015 and 2018 general elections held between 2003-2019 were examined within the framework of the traditional model. In the study, quarterly data of gross domestic product, current transfers, unemployment rate, public expenditures, Money supply, domestic loans, inflation rate were used for the opportunistic model. In the analysis part, the autoregressive model used by Alesina, Cohen and Roubini in their work fo OECD countries and industrial countries in 1992. According to the findings obtained from the analyzes, it has been observed that the general election of the deputy had an impact on public expenditures, domestic credit, inlation, public bank loans, M2. This shows that the policies implemented by the ruling party during the election periods are different, thus, political business cycles ocur.