Abstract
This article studies the role of central bank governors in monetary policy decisions taken by a committee. To carry out this analysis, we constructed a novel dataset of committee voting behaviour for six OECD countries for up to three decades. Using a range of Taylor rule specifications, we show that a change in governor significantly affects interest rate setting. We also observe systematic differences in interest rate rules based on the political party appointing the governor, with more inflation-averse policies under governors that are appointed by a right-wing political authority. We show the robustness of this result by using a wider dataset (including over 3000 observations from 12 countries).
Original language | English |
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Pages (from-to) | 155-185 |
Number of pages | 31 |
Journal | Cesifo Economic Studies |
Volume | 67 |
Issue number | 2 |
Early online date | 6 Dec 2020 |
DOIs | |
Publication status | Published - Jun 2021 |
JEL classifications
- e50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
- e02 - Institutions and the Macroeconomy
- p16 - Capitalist Systems: Political Economy
Keywords
- Taylor rule
- central bank governors
- monetary policy
- IDEOLOGY
- MARKETS
- POWER
- GENERALIZED-METHOD
- MONETARY-POLICY COMMITTEES
- CHAIRMAN
- INDEPENDENCE
- ESTIMATORS
- TIME-SERIES
- RULES