Economic policy, economic performance and elections

Abstract

This paper explores the role of reelection pressures in determining economic policy. By assuming that voters are uncertai n as to the efficacy of different policies, a reelection process is derived that depends on both a politician's past policies and the level of economic activity during his time in office. It is shown th at the less uncertain are voters as to which policy is best, the more likely is a politician to manipulate policy for reelection purposes. Manipulation entails implementing the policy that is more likely to be well received rather than the one that maximizes income. Copyright 1993 by American Economic Association.