International and domestic constraints on political business cycles in OECD economies: A Comment

We attempt to assess the effect of monetary policy in a panel model for 16 OECD countries. To answer the question whether central banks actively create political business cycles we focus on the short-term interest rate as a proxy for the use of monetary instruments. Our results indicate that central banks do not create political business cyles. This conclusion holds no matter whether central banks are independent or not or are constrained by the exchange rate system in force.