General elections and government expenditure cycles: Theory and evidence from the UK

This paper presents a testable theoretical framework that extends the standard demand-side approach to modelling government expenditure on goods and services. The focus is on the adjustment of expenditure to disequilibria: we investigate whether the adjustment of UK exhaustive government expenditure between 1966 and 2002 to its long-run equilibrium path is symmetric. The evidence points to asymmetric adjustment to the demands of a representative voter over the election cycle but not between Labour and Conservative governments. Convergence to equilibrium is faster during the later stages of each election cycle.