In this paper a signalling model is used to examine the role of party ideology in the conduct of economic policy. A distinguishing feature of the model is that policy makers have more knowledge about the efficacy of economy policy than voters. This asymmetry of information generates an incentive for the policy makers to adopt an ideological view of how the economy works. It is shown that party ideologies are most likely to arise in rigid economic and polarized political systems.

economic policy, party idiology, signalling model
Positive Analysis of Policy-Making and Implementation (jel D78), Policy Objectives; Policy Designs and Consistency; Policy Coordination (jel E61),
European Journal of Political Economy
Erasmus School of Economics

Swank, O.H. (1998). Towards an economic theory of party ideology. European Journal of Political Economy, 223–240. doi:10.1016/S0176-2680(98)00005-6