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This paper seeks to present a positive model of politico-economic interaction in the United Kingdom and to estimate it empirically with recent data. The basic hypothesis advanced is that the governing party aims to stay in power and therefore seeks to increase its popularity with the electorate when its (perceived) re-election chances are low. For this purpose it undertakes an expansionary policy expected to lead to a popularity increase and an improvement in its election prospects. [ABSTRACT FROM AUTHOR]

This paper represents a preliminary exploration of the question as to whether agencies in the public sector have been used as a tool of anti-inflation policy. Government intentions to impose extra restraints on public corporations, relative to private industry, have become obvious since 1972 in so far as they are an explicit element of policy. Looking at the post-war period as a whole there is some basis for thinking that similar intentions were largely absent up to 1964 but in the 1965-72 period they were present first of all in the way in which the machinery of prices and incomes policy was applied in the 1965-9 period, second in an even more disguised form of pressure in 1970 and 1971 and third in the more effective control of public corporations in the execution of the CBI initiative during parts of 1971 and 1972. The evidence of such intentions is much less clear for wages than prices and indeed since the early 1960s public corporation wage inflation has if anything been slightly higher than in manufacturing industry and the difference increased in the 1970s. The data suggest that discriminatory price restraint was partly effective in the 1965-7 period and more strongly so in the 1970s. The analysis of the effects of such restraints is a separate topic in itself. Price restraint on the public sector has probably been attempted for a number of reasons. One is to show, in the context of invocations for general price and wage restraint that the Government could keep its own house in order. In addition there has been concern for some of the anticipatory and distributional effects of inflation. The rather debilitating effect on the Corporations, as recorded in their recent Annual Reports,[1] has to be set against any such benefits. [ABSTRACT FROM AUTHOR]