Toke Aidt, Zareh Asatryan, Lusine Badalyan, Friedrich Heinemann, 28 November 2015

Central bank independence was supposed to end politically driven monetary policy. This column discusses new evidence showing a sizeable spike in the growth rate of cash and overnight bank deposits centred on election days. The spike is present in countries with weak political institutions, but not in OECD countries. The cycle seems to be related to the cash demand created by systemic vote buying.

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