Does Easy Money Win Elections?

Yao Chen, Felix Ward and Florian van Genderen

No 22065, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Monetary policy; Central bank independence; political pressure; Economic voting; Political business cycles; Trilemma (search for similar items in EconPapers)
JEL-codes: D72 E52 E58 F42 N10 (search for similar items in EconPapers)
Date: 2026-10
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