Populism and Monetary Policy Transmission

Abstract

This paper examines how populism shapes the transmission of monetary policy. Using German credit-registry data, firm surveys, and NLP analysis of 700,000 tweets, I show that firms in high-populism districts hold elevated inflation expectations, revise them less in response to monetary policy surprises, and adjust their credit demand significantly less—consistent with a distorted information environment and eroded institutional trust in the ECB.