Rational Prospective Citizens

Viewing this evidentiary pattern, economists naturally questioned the adaptive expectations and exploitable Phillips-curves assumptions. Voters and economic actors can easily foresee elections and policy-makers’ incentives, so electoral cycles should not exist or should have no real effects under RE (although incentives for direct transfers may remain). If policy-makers do not possess any informational advantages over voters, then they cannot effectively signal their competence through pre-electoral stimulation, and, as a result, there are no incentives for Phillips-curve exploitations. However, if some actors apply adaptive expectations, then exploitable Phillips curves exist to that degree; likewise, if some voters evaluate naively retrospectively, their vote share gauges incumbents’ broader electioneering incentives. Moreover, if some performance-affecting incumbent characteristics persist over time and if voters cannot fully observe these characteristics, rationally prospective actors would nonetheless evaluate retrospectivelyTherefore, with incomplete citizen RE, classical electoral outcome cycle models should have some, albeit irregular or muted, validity. As Hibbs (this volume) describes, RE competence signaling electoral cycle models are distinguished from complete information RE models in that elected policymakers enjoy an information advantage—in particular, knowledge of their own competency—over voters. This informational advantage results in smaller, less regular cycles, especially in real outcomes. The empirical record may fit, but determining whether the correct degree of “smaller, less regular” cycles manifests, even if that degree were theoretically determinate, would be empirically difficult.Moreover, many context-conditional considerations would also imply smaller, less regular cycles, especially in an evidentiary record generated by studies that omitted such conditionality. Thus, empirical research does not contradict RE competence-signaling electoral cycles; cycles do seem less regular and smaller than models in which voters naively reward (or punish) policy-makers for good (or bad) economic performance suggest. However, the evidence is inconsistent with rational retrospective voting (Alesina, Londregan, and Rosenthal 1993); context-conditional cycles theories, whether RE or myopic, would also predict smaller, irregular cycles, especially as previously estimated; and smaller, irregular cycles would also obtain if political-economic actors in reality had varying information and rationality. The case for RE electoral cycles is more strongly theoretical than empirical: voters’ prospective, RE evaluations probably do limit the degree to which incumbents manipulate economic policies and, a fortiori, outcomes for electoral advantage, but RE alone cannot (fully) explain the patterns in the accumulated empirical record. That is, observed cycles can be reconciled with RE, but RE may not (fully) explain observed cycles.
Context, including the information environments in which political economic actors operate, remains a critical determinant of incentives to electioneer..

Further Discussion

One component of context conditionality that is especially neglected in electoral cycle studies is that of electoral challengers, who play little direct role in most models. Higher-quality challengers, for instance, may lead incumbents to expect closer elections, yielding greater electioneering in q...

Adaptive Retrospective Citizens Partisan Cycles

In partisan models of political economics, candidates contest and voters adjudicate elections in partisan terms. Parties cultivate ties to different voter groups and nurture reputations for policy-making that favors those groups. Parties and voters value these ties and reputations, so incumbents con...

Rational Prospective Citizens Partisan Cycles

Unlike the electoral cycles case, empirical support for partisan cycles seemed strong, so no particular empirical puzzle motivated RE partisan theory. Rather, Alesina’s (1987, 1988) rational partisan theory (RPT) filled theoretical needs, providing a framework logically consistent with modern RE e...

Further Discussion Partisan Cycles

Other empirical studies of RPT report more mixed results. Sheffrin (1989), for example, finds US monetary cycles, but not significantly consistent with RPT in the USA or elsewhere. Using over 100 years of American data, Klein (1996) finds political events associated with ends of slumps and booms, co...

Two Views Of Economic Voting Prospective And Retrospective