A time series analysis indicates monetary growth and the Gallup Poll in Canada are systematically related at 'electoral cycle' periodicities (5 to 20 quarters) under flexible exchange rates, and demonstrates the absence of an electoral component in Canadian monetary growth under fixed rates. These results confirm empirically a widely accepted extension of the Mundell-Fleming argument that monetary policy is effective only under flexible rates, which to my knowledge has not before been directly investigated: international constraints on the small open economy under fixed rates lead to the abandonment of monetary policy as an active instrument in electoral politics.

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Persistent URL dx.doi.org/10.1007/BF00126000
Journal Public Choice
Winer, S.L. (1986). Money and politics in a small open economy. Public Choice, 51(2), 221–239. doi:10.1007/BF00126000