This Master’s Thesis analyzes the implementation of economic policy within the political cycle, i.e. attempts to analyze the application of economic theory in the condition of real social circumstances by using the example of the implementation of austerity policy in EU member states that have become so since 2004. Economic theory serves as a guideline for the implementation of a particular economic policy, but its implementation is influenced by different circumstances. The most important exogenous determinant (circumstance) can be the election cycle where, in democratic countries, politicians, who are in charge of conducting economic policy, must be re-elected to their office. Therefore, elections are certainly the most important determinant in the career of a certain politician. Therefore, the electoral cycle serves as a good orientation for the analysis of the impact of social circumstances on the implementation of economic policy according to a given theory. For this purpose, a historical overview of the development of the theory of austerity policy will be provided, as well as an overview of its implementation in economic policy. This will be followed by an overview of public choice theory and the theory of political cycles that provide a theoretical framework for explaining the importance of the elections in the lives of rational economic agents. Based on the given analysis, it will be possible to conduct an econometric analysis which will try to determine the importance of the political cycle in the implementation of austerity policy, especially in the context of the Great Recession. Methodologically, the panel analysis forms the basis of the empirical analysis of the thesis and it will be conducted on a sample of 11 new EU member states in the period 2004.-2019.