Political Pressure on Central Banks

2021/02/07 by Carola Conces Binder, Carola Binder · 6 citations
Economics, Econometrics and Finance · #Fiscal Policies and Political Economy #Monetary Policy and Economic Impact #Global Financial Crisis and Policies

paper · doi:10.1111/jmcb.12772

Abstract

Abstract I construct a quarterly data set on political pressure faced by 118 central banks from 2010 to 2018 using country‐level reports. I code whether each central bank is reportedly succumbing to pressure or resisting pressure. About 10% of central banks reportedly face political pressure in an average year. Even central banks with high legal independence frequently face pressure—nearly always for looser monetary policy. Pressure on the central bank is associated with higher inflation and inflation persistence. Pressure is more likely to come from governments with left‐wing or nationalist executives, few checks and balances, or weak electoral competition.

Citations

• Estimation and Inference of Impulse Responses by Local Projections

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