What is a political trade cycle?
The political trade cycle is a shift in the economic markets of mediated policy. Such changes are commonly associated with elections where introduction can support specific policies to increase their causes. As a result of elections, officials elected to take office in economic and monetary policy in accordance with their goal of the campaign or to strengthen the economy to create a positive view of their administration. A clean result may be a form of a cycle of boom and bust tied to the elections. Not all economists have signed up for the idea of a political trade cycle and those who can have different opinions on this phenomenon. Research shows that market changes tend to occur in conjunction with the elections, but it can be caused by other causes than political manipulation. Investors and other participants tend to be a period of political change during the nervousness, and this could contribute to market trends.
As part of the theory of political business cycle, when introduced are prepared for elections, they can liberalize economic policy to increase the money supply and flow of the loan. The intention of this is to keep the ingredients happy and increase feelings of satisfaction and economic security. Existing entities can emphasize this in their campaign materials to indicate that the ingredients should vote for them to make the economy strong and productive. Some of these changes may actually contribute to economic problems in the future, but the introduction of the bank about the short -term satisfaction of voters meet their goals.
After the elections, politicians can make some changes in policy for various reasons. In dramatic elections where another party takes power, these changes may be significant, because many led political parties have very different views on monetary and economic policy. Elected officials may also worry about problems in the future and could make some conservative political decisions to supportLong -term market stability. This can create a ripple that leads to changes in economic conditions and creates a political trade cycle.
Economists can monitor economic activity and can be able to combine specific incidents on the timeline. In the political business cycle, economists could expect to see some economic growth just before the elections as a result of liberalized politicians followed by a period of contraction, because new officials will take the office or re -election to adjust their old policy to limit inflation. Analysis of economic conditions may include speculation about the factors that could have caused them, from the investor's panic to change power to change policy.