Does Political Business Cycle Exist in India?

There exists a vast literature inquiring and modelling the nexus between politics and macroeconomic policy making. Most of the empirical studies based on data of OECD countries have found that electoral and partisan motives have a greater short term impact on inflation than on real variables like output growth or rate of unemployment. Recent studies based panel data on OECD countries have reinforced these findings. The present study is an empirical attempt to explore the nature of this nexus in case of independent India using 62 years of monthly data on inflation supplemented with data on election and ideological stand of political parties in power. The empirical exercise is based two statistical procedures. These are regression based procedures and Anova based procedures. As regards Anova based exercises, the GLM procedure is to take into account the unbalanced nature of the implied factorial design of the exercise. [ABSTRACT FROM AUTHOR]