Since the 1980s, income inequality has increased substantially in several countries. Yet the political logic that triggered rising inequality in some places but not in others remains poorly understood. This paper builds a theory that links central bank independence to these dynamics. It posits...

The onset of the housing and subsequent financial crisis in 2008 marked the steepest economic downturn in the United. States, since the Great Depression in the late 1920s and 1930s. This most recent financial crisis has been characterized by massive layoffs and displacement. Given the depth of...

Central bank independence (CBI) has been understood to originate in domestic political commitments to tackle inflation and government profligacy. But recent studies demonstrate that international financial institutions (IFIs) and capital markets also play a role in influencing states to delegate...

This paper studies the role of the International Monetary Fund (IMF) in promoting central bank independence (CBI). While anecdotal evidence suggests that the IMF has been playing a vital role for CBI, the underlying mechanisms of this influence are not well understood. We argue that the IMF has...

This paper tests the existence of political credit cycles, the positive co-movement between credit and elections. While support for this relationship has been found in some single-country studies, the link between electoral cycles and credit expansion has seen little exploration at the...

International lenders of last resorts are often accused to create financial instability because they generate moral hazard. The evidence for this is thin and plagued with measurement error. Examining the case of the US, we use the number of American troops hosted by third countries to measure...

Central bank independence (CBI) solves the time inconsistency problem faced by policymakers with respect to monetary policy. However, it does not solve their underlying incentives to manipulate the economy for political gains. Unable to use monetary policy, and often limited in their ability to...

What are the global financial spillovers from major political shocks in the United States? We analyze the response of international financial markets to the 2016 US presidential election. The surprise election outcome represents an exogenous shock that affords us a unique opportunity to estimate...