POLITICAL BUSINESS CYCLE AND ECONOMIC INSTABILITY- LITERATURE REVIEW
POLITICAL BUSINESS CYCLE AND ECONOMIC INSTABILITY- LITERATURE REVIEW

Summary/Abstract: This paper analyzes the fundamental concepts that compose the phenomenon of political business cycle and the models that have been created to support this theoretical background. A first theory on this concept is considered to be the classic perspective, which has been developed by William Nordhaus in 1975. As a result of his work, other research started to appear with multiple theories and visions upon this phenomenon. Through this paper we have tried to highlight the most important of these theories. For each major theory, conclusions are presented. In the end, an attempt is made to find reasoned onclusions concerning the validity of these theories to the economic environment.

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