Working Paper: NBER ID: w3499
Authors: Takatoshi Ito
Abstract: The objective of this paper is twofold. First, this paper emphasizes that in a parliamentary system, such as in Japan, election timings become endogenous, in that good economic performances tend to trigger elections. Second, impacts of international factors, such as foreign exchange reserves and elections of the United States, on domestic economic performances will be examined in the context of political business cycles. This paper finds only a limited link between economic performances and international variables, except one that upcoming elections in the United States tend to cause a higher rate of growth in Japan. Evidence suggests that although blatant policies, such as a beggar-thy-neighbor policy, were not adopted, a more subtle international cooperation, in the form of Japanese expansion to pill up the United States economy, have been used.
Keywords: political business cycles; Japan; international factors; election timing; economic performance
JEL Codes: D72; E31; E62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. elections (K16) | higher growth rates in Japan (O49) |
| economic conditions (E66) | election timings in Japan (D72) |
| higher growth and lower inflation (O42) | likelihood of elections being called in Japan (D72) |