Multiparty Competition, Founding Elections and Political Business Cycles in Africa

Political business cycle theory and empirics typically assume that elections are competitive. Yet, as empirical work on political business cycles turns increasingly to developing countries for evidence, this assumption becomes untenable. We propose and test two empirical hypotheses regarding political business cycles: first, we should only see cycles when elections involve multiparty competit ion; second, we should see larger cycles in "founding" elections. Using a new indicator of multiparty competition and macroeconomic data from Africa, we find strong support for both hypotheses. These findings have implications for democratic transitions and the compatibility of economic and political reform in nascent democracies.