Political business cycle

The political business cycle refers to the pattern where governments influence economic activity to favor their re-election prospects. Before elections, policymakers might boost spending or cut taxes to stimulate growth and improve their popularity. After elections, they may tighten policies to manage inflation or debt. This cycle can lead to short-term economic fluctuations driven more by political motives than by economic fundamentals. It highlights how political considerations can impact economic decisions, sometimes causing instability or inefficiencies within an economy.