The Influence of Political Partisanship on Macroprudential Policy
Since the 2008 global financial crisis, macroprudential policy has emerged as a policy priority for maintaining global financial stability. However, due to the time inconsistency and distributional effects of macroprudential policies, the implementation of macroprudential policies can be politically sensitive for incumbent governments concerned with short-term political objectives. In this paper, I investigate the politics of macroprudential policy and test whether political partisanship matters for the use of macroprudential policy tools. In line with the previous literature on political partisanship, I hypothesize that left-wing governments are more likely to use macroprudential policy tools than the right-wing governments. To test this hypothesis, I analyze a cross-country panel sample dataset covering 132 countries from 1990 to 2016. My results indicate that, under left-wing governments, as independent central banks become more involved in financial supervision, macroprudential measures tend to be loosened. In addition, I find partisan divergence in macroprudential policies in a subsample of my data from the post-global financial crisis period. These results imply that policymakers should establish macroprudential governance frameworks in ways that ensure transparency and accountability of the policy processes and that prevent the influence of short-term political considerations.
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Madel, Jacob D. (Georgetown University, 2012)A major public policy issue faced by all States recently has been the decision whether to privatize prisons. However, the dramatic increase in the number of private prisons in the United States since the early 2000s has ...