Does Government Ideology Matter in Monetary Policy? – A Panel Data Analysis for OECD Countries

Ansgar Belke and Niklas Potrafke

No 94, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper examines the effect of government ideology on monetary policy in a quarterly data set of 15 OECD countries in the period 1980.1-2005.4. Our Taylor-rule specification focuses on the interactions of a new time-variant indicator for central bank independence and government ideology. The results suggest that leftist governments did not decrease short term nominal interest rates at all. In contrast, short term nominal interest rates were higher under leftist governments. A potential reason for this finding might be that leftist governments have sought to make a market-oriented policy shift by delegating monetary policy to conservative central bankers.

Keywords: Monetary policy; Taylor rule; government ideology; partisan politics; central bank independence; panel data (search for similar items in EconPapers)
JEL-codes: C23 D72 E52 E58 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Does government ideology matter in monetary policy? A panel data analysis for OECD countries (2012)
Working Paper: Does government ideology matter in monetary policy? A panel data analysis for OECD countries (2012)
Working Paper: Does Government Ideology Matter in Monetary Policy?: A Panel Data Analysis for OECD Countries (2011)
Working Paper: Does Government Ideology Matter in Monetary Policy? A Panel Data Analysis for OECD Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:94

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