By Sabine Lessmann, Rudolf Wildenmann
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Extra info for Budgetary Politics and Elections: An Investigation of Public Expenditures in West Germany
Moreover, it is by no means evident that organizational factors must necessarily lead to a strategy of 'muddling through' combined with incrementalism. Kristensen (1980), for example, also starts from an atomized decision-making process and emphasizes the importance of organizational processes, but reaches a completely different explanation of expenditure developments. He demonstrates that the logic of the political-bureaucratic decision-making process is the cause of public expenditure growth.
The specifications are explained with the help of simulation results. The actors involved in the politico-economic model are: a) the voters, who judge government performance during the election period with respect to their own utility conceptions (Kirchgässner adopts, like MacRae, a quadratic loss function); b) the government, either trying to maximize its vote share at the next election or trying to maximize its ideology with a re-election constraint. As long as re-election is not endangered, the government will try to pursue its ideology.
Moreover, only a simultaneous development of both indicators - unemployment and inflation - could be taken as sufficient empirical evidence. 4 of this chapter. A more detailed theoretical critique of the Nordhaus model will follow at the end of this chapter together with a general critique of electoral cycle models, as many crucial elements of this model will come up again in the models which we will deal with now. In 1977 MacRae developed a model of a political business cycle which is similar to Nordhaus' short-run model.