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Does Easy Money Win Elections?

Author

Listed:
  • Chen, Yao
  • van Genderen, Florian
  • Ward, Felix

Abstract

Governments press central banks for lower interest rates on the premise that easy money wins elections. We test this premise for 385 elections in 18 countries, 1900–2020, using exogenous interest rate changes. We find no evidence that monetary easing helps incumbents. At the point estimate, a typical easing leaves the incumbent’s vote share unchanged; the one-sided 95 percent confidence bound on the gain is 0.90 percentage points. Of 104 incumbent defeats, such an easing would have reversed none at the point estimate and 15 at the bound, all in close races. Easy money offers incumbents no reliable electoral return.

Suggested Citation

  • Chen, Yao & van Genderen, Florian & Ward, Felix, 2026. "Does Easy Money Win Elections?," CEPR Discussion Papers 22065, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:22065
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    File URL: https://cepr.org/publications/DP22065
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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