Impact of political instability of monetary policy conduct and economic activity recovery: empirical investigation

Ihsen Abid (), Salha Ben Salem () and Wajdi Frikha ()
Additional contact information
Ihsen Abid: Imam Mohammad Ibn Saud Islamic University (IMSIU)
Salha Ben Salem: Faculty of Economics Sciences and Management of Mahdia
Wajdi Frikha: University of Sfax

SN Business & Economics, 2024, vol. 4, issue 12, 1-18

Abstract: Abstract This empirical study aims to investigate the effects of political instability on economic volatility and monetary policy conduct. The econometric methodology adopted is the Panel Auto-Regressive Distributed Lag (PARDL). The instability variable was determined using the PCA method for 9 countries from the first quarter of 2010 to the first quarter of 2023. The empirical findings show that political instability had a negative influence on economic volatility and threatened monetary policy transmission. Moreover, it is confirmed that while political instability has a short-term effect on economic volatility, its impact on monetary policy transmission is more pronounced in the long term. These findings serve as a warning to policymakers, as political stability plays a crucial role in shaping macroeconomic outcomes through fiscal and monetary policy decisions. Therefore, authorities should strive to establish a stronger and more enduring political system capable of fostering activities conducive to sustainable economic development.

Keywords: Political instability; Economic volatility; Monetary policy conduct; Panel auto-regressive distributed lag (search for similar items in EconPapers)
JEL-codes: C23 E31 E44 E52 F47 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s43546-024-00750-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:snbeco:v:4:y:2024:i:12:d:10.1007_s43546-024-00750-2

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546

DOI: 10.1007/s43546-024-00750-2

Access Statistics for this article

SN Business & Economics is currently edited by Gino D'Oca

More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().