The plan of this report is the following. In the next section we present a conceptual background, reviewing the basic opportunistic political business cycle, the problems with monetary theories, and the theory and evidence supporting the existence of a political fiscal cycle. In section 3, we describe the data and the basic format of the empirical tests. As indicated above, a major contribution of this study is both the collection of regional and local data and novel use of these data to test for policy effects of elections. In section 4 we discuss the empirical results at the national level. In section 5 we consider the results for fiscal variables at the regional (state and city) level. A key result of these sections is the effect of elections on investment spending prior to the election. We look at the effects of both national and regional elections on regional level data, giving special emphasis to the question of whether the regional results reflect a response to national elections or to regional elections themselves. In these two sections we also examine more closely some of the more surprising results. The final section contains a summary and conclusions.
