Does Easy Money Win Elections?

Felix Ward, Florian van Genderen and Yao Chen
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Felix Ward: Erasmus University Rotterdam
Florian van Genderen: Erasmus University Rotterdam
Yao Chen: Erasmus University Rotterdam

No 26-085/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

JEL-codes: D72 E52 E58 F42 (search for similar items in EconPapers)
Date: 2026-11-01
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