Populists can pressure central banks to cut rates, paper finds
Researchers say the most populist governments can get rates lowered by 30 basis points
Populist leaders can successfully pressure central banks to lower interest rates through public attacks, a research paper argues.
Michael Gavin and Mark Manger find such leaders can achieve concessions on monetary policy without formally reducing central banks’ legal independence of central banks.
Populism and De Facto Central Bank Independence uses a political bargaining model to explain its findings. The paper was published in Comparative European Politics.
The authors define populism as
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