The Influence of Government Ideology on Monetary Policy: New Cross‐Country Evidence Based on Dynamic Heterogeneous Panels

24 Pages Posted: 17 May 2020

See all articles by Federico M. Giesenow

Federico M. Giesenow

affiliation not provided to SSRN

Jakob de Haan

De Nederlandsche Bank - Research Department

Date Written: July 2019

Abstract

Using data of 23 OECD countries over the 1980–2005 period, we examine whether government ideology affects monetary policy, conditional on central bank independence. Unlike previous studies in this line of literature, we estimate central bank behavior using forward‐looking and real‐time data in Taylor rule models and use estimators that allow for heterogeneity across countries. Our models with heterogeneous slope coefficients for the full sample do not suggest partisan effects. We also do not find evidence that central bank behavior is conditioned by the interaction of the ideology of the incumbent government and the electoral calendar.

Keywords: Central Bank Independence, ideology, monetary policy, partisan theory

Suggested Citation

Giesenow, Federico M. and de Haan, Jakob, The Influence of Government Ideology on Monetary Policy: New Cross‐Country Evidence Based on Dynamic Heterogeneous Panels (July 2019). Economics & Politics, Vol. 31, Issue 2, pp. 216-239, 2019, Available at SSRN: https://ssrn.com/abstract=3598383 or http://dx.doi.org/10.1111/ecpo.12126

Federico M. Giesenow (Contact Author)

affiliation not provided to SSRN

No Address Available

Jakob De Haan

De Nederlandsche Bank - Research Department

P.O. Box 98
1000 AB Amsterdam
Netherlands

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