Who creates poltical business cycles? : (should central banks be blamed?)
AbstractLittle attention has been paid in most economic studies on political businesscycles to separate the effects of fiscal and monetary policy. We attempt to as-sess the effect of monetary policy in a panel model for 16 OECD countries.To answer the question whether central banks actively create political busi-ness cycles we focus on the short-term interest rate as a proxy for the use ofmonetary instruments. Our results indicate that central banks should not beblamed for creating political business cycles as we do not find any evidencefor cyclical behavior in the short-term interest rate. This conclusion holds nomatter whether central banks are independent or not or are constrained bythe exchange rate system in force.
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Bibliographic InfoPaper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 99E56.
Date of creation: 1999
Date of revision:
Other versions of this item:
- Leertouwer, Erik & Maier, Philipp, 2001. "Who creates political business cycles: should central banks be blamed?," European Journal of Political Economy, Elsevier, vol. 17(3), pages 445-463, September.
- NEP-ALL-2000-02-28 (All new papers)
- NEP-CDM-2000-02-28 (Collective Decision-Making)
- NEP-IFN-2000-02-28 (International Finance)
- NEP-MON-2000-02-28 (Monetary Economics)
- NEP-PUB-2000-02-28 (Public Finance)
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