Electoral Uncertainty and the Macroeconomy: the Evidence from Canada

The partisan advantage and incumbency advantage versions ofthe rational partisan business cycle model are tested. Bothmodels assume agents form weighted averages of partisaninflation rates during an election period, and differ only inhow the weights are formed which alters the form of businesscycles. The partisan advantage assumes fixed weightsdesignated for both major parties in each election, whereasthe incumbency advantage model assumes fixed weights forwhichever is the incumbent and opposition party in eachelection. The symmetric representation assumes each electionis a toss-up. Strongest support is found for a temporarysymmetric effect on the level of output, but none of themodels are supported for temporary electoral changes in growthor unemployment rates.