US-Monetary Cycles and the Global Demand for Neo-liberal Politics

• In Event: Political Parties, Central Banks, and the International Economy

Abstract

Tight credit markets are often vehicle for the adoption but banking has internationalized to the point that credit conditions in the world’s financial centers dictate credit conditions globally, with little scope for intervention by domestic monetary authorities. Tight credit conditions shifts power towards financial markets, and towards market-friendly politics. We find support for our theory in a study of electoral manifestos of political parties from 59 countries between 1962-2017. High American interest rates correlate with more market friendly political rhetoric abroad, especially where financial markets are especially dependent on US banking and especially where debt structures put borrowers in a more subservient position.

Authors

• Timm Betz, Technical University of Munich

• Cristina Bodea, Michigan State University

• Andrew Kerner, Michigan State University