The effects of elections on macroprudential policy
Journal of Comparative Economics, cilt.50, sa.2, ss.507-533, 2022 (SSCI, Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 50 Sayı: 2
- Basım Tarihi: 2022
- Doi Numarası: 10.1016/j.jce.2021.12.001
- Dergi Adı: Journal of Comparative Economics
- Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Index Islamicus, Public Affairs Index, zbMATH
- Sayfa Sayıları: ss.507-533
- Anahtar Kelimeler: Elections, Electoral cycles, Institutional quality, Macroprudential policy, Political economy
- Boğaziçi Üniversitesi Adresli: Evet
Özet
We provide evidence for a specific challenge in the design of macroprudential policy, namely political interference. Using panel data from 80 countries over the period of 1990–2016, we uncover the electoral cycles in macroprudential policy. We show that a loosening in macroprudential policy becomes more likely in the pre-election year, especially in countries with lower institutional quality. There is no evidence for the reversal of such actions in the post-election year. We also find that capital account openness, the history of macroprudential policy actions and inflation matter in determining the strength of electoral cycles in macroprudential policy, in addition to institutional quality. The electoral cycles are found to be stronger in countries that are financially less open, that relied less on macroprudential policy in the past, and that have lower inflation.