Abstract
The paper uses time series data from 1994 to 2016, and investigate how the political cycles work in Taiwan central government by autoregressive model. Since the related studies usually focus on local economy, the variables which can be discussed are limited. However, the scope of political cycles in this paper is central government, we investigate how the political cycles affect macroeconomic variables, financial variables, monetary variables and the asset prices, and discuss these variables from two points of view: opportunistic cycles and partisan cycles. In the aspect of opportunistic cycles, the macroeconomic variables are significantly impacted as the presidential elections come, and the directions are same with the theory. The financial variables show that there are expansionary policies before elections. In contrast, there is no evidence to show that monetary variables (except for the growth rate of M2) fluctuate with opportunistic cycle. In the aspect of partisan cycles, macroeconomic variables and monetary variables hardly vary with the different ruling party, but financial variables are obviously not at the same level between the two main parties. Therefore, we can find that the central bank is somewhat independent. Also, the two parties have little difference on economic object.