Political Business Cycle: Political Arguments for Economic Instabilities

Reviewing economic literature indicates that economists were emphasizing on economic factors as causes of economic instabilities until 1970s. But since then, political economists emerged who attributed economic instability to factors other than economic ones. Offering theories such as political business cycle, they tried to prove that political factors lead to economic instabilities. They offered opportunistic political business cycles and partisan political business cycles that respectively, attributed the economic instabilities to election, and to replacement of political parties. To elaborate this literature, the present article first focuses on these two kinds of political business cycles and tries to explain through which mechanisms political factors cause instabilities in economic sphere. It considers political business cycles as a sign of "bringing the politics back in economics" an idea which is an obsolete thought, dating back to the past two centuries. Finally, the article indicates that "bringing the politics back in economics" can question those economists who insist in separation of economics from politics, and emphasizes interdisciplinary studies developed in the recent decades.