Does the central bank contribute to the political monetary cycles in Bangladesh?

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• 作者：Mohammad Abdul Munim Joarder ; A. K. M. Nurul Hossain…
• 关键词：Political monetary cycles ; Central bank independence ; ARDL bounds testing ; Bangladesh
• 刊名：Economic Change and Restructuring
• 出版年：2016
• 出版时间：November 2016
• 年：2016
• 卷：49
• 期：4
• 页码：365-394
• 全文大小：753 KB
• 刊物主题：Development Economics; International Economics; Economic Systems; Macroeconomics/Monetary Economics; Economic Growth; Economic Policy;
• 出版者：Springer US
• ISSN：1574-0277
• 卷排序：49

文摘

This study aims to explore the impact of elections on the inflationary process in Bangladesh i.e., to observe whether elections have any influence on monetary variables like money supply, exchanges rate and thus inflation. We used quarterly data as the incumbent in Bangladesh must give a maximum of 3 months’ time to the caretaker government to accomplish the election. Our full ARDL estimation suggested that an appreciation of the exchange rate just before the election reduced inflation significantly and an effective way of incumbent’s to gain popularity. We found that current inflation was positively associated (though not significantly) with the previous quarter’s money supply measured by M1. The incumbent took policies to reduce the inflation during election period as voters place more importance in the recent history. We find evidence of political monetary cycles in Bangladesh. Bangladesh Bank’s independence should be given priority so that it can withstand political pressure to stimulate the economy before elections or finance election-related increases in government spending.