POLITICAL CYCLES AND CYCLICAL POLICIES

We test how government revenue and expenditure depend on ideology, ele ctions and economic activity. We show how fiscal forecasts can be used to identify the determinants of government revenue and expenditure. T he approach is illustrated using a unique, unpublished Swedish data se t of fiscal forecasts and forecasts of economic activity. We find part isan effects, but no election effects. Revenue and expenditure, but al so the fiscal surplus, are lower with right-wing governments. Fiscal p olicy has been countercyclical. Revenue varies positively with nominal earnings; expenditure varies negatively with real GDP.