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Economics

The Politics of Fiscal Policy and Budget Deficits

Quick fact

Governments tend to increase spending and cut taxes right before elections, a phenomenon known as the 'political business cycle'—even when the economy doesn't need a boost.

Why this is interesting

You’ve probably heard debates about government spending and deficits—on the news, around election time, or in policy arguments. But what if the real driver of deficits isn’t just the economy, but the political game itself?