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Recent contributions to the study of inequality have provided strong evidence towards the presence of an established trend, over several decades, of growing economic inequality (with a particular focus on distribution within their tails; i.e. top 10%, 1%) across countries with developed economies and indications of similar trends across developing economies. While the causality and influencing factors to these trends has widely been discussed, and has range from declining domestic growth rates as economies move towards high mass consumption states to globalisation, political decision making and policy application been referred to as both contributory or an instrument for dampening such trends, through the application of Partisan Business Cycles. However contemporary studies have indicated a declining correlation between political orientation of national legislatures or executive branches and domestic economic and financial performance (which by extension, through it strong correlation with growth, inequality). However little exploratory research has been done on the deviation between the observed indicators of inequality and its trend line (residual). As such this paper has explored the relationships between the components of the Partisan Business Cycles and this deviation across a set of advanced economies of a time period between 1975 to 2010. The paper additionally considered political structural and situational constrains, such as governmental systems, minority governments, etc... , on their decision making as variables for consideration.
The analysis was performed using Auto-regression Integrated Moving Average and Multi-Linear Regression modelling. Which strongly indicates that neither the Partisan Business Cycle nor the political situational and structures are explanatory indicators of the variations in inequality from the trend. Nor can previous observed deviations provide strong indication of a future patterns in the deviations from the trend. As such this paper finds no distinguished pattern within these residuals suggesting that such observations can be categorised as white noise around these trends lines or inequality.
O'Doherty, R. (2016) An Exploration of the Relationship between the Partisan-Business Cycle and Economic Inequality within Developed Economies, Masters Dissertation, Dublin Institute of Technology.