Populism casts long shadow over central bank policy – NBER paper
Countries with history of monetary financing make extra effort to show anti-inflationary credentials
The memory of high inflation under populist leaders has a lingering effect on central bank policy long after the governments have been displaced, a new study argues.
The working paper, Fiscal populism and monetary policy rules, was published this month by the US National Bureau of Economic Research. It argues that under left-wing populist leaders, central banks lend more to governments than is the case under right-wing populist regimes.
“While the emergence of right-wing populist governments is
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