Working Paper No. 143. Why Do Politicians Implement Central Bank Independence Reforms?
Working Paper No. 143.
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This paper is a first empirical attempt to investigate why politicians around the world have chosen to give up power to independent central banks, thereby reducing their ability to fine-tune the economy. A new data-set covering 132 countries, of which 89 countries had implemented such reforms, was collected. Politicians in non-OECD countries were more likely to delegate power to independent central banks if their country has been characterized by a high variability in historical inflation and if they faced a high probability of being replaced. No such effects were found for OECD-countries.
Daunfeldt, S-O., Hellström, J. & Landström, M. (2009). Why Do Politicians Implement Central Bank Independence Reforms? Ratio Working Paper No. 143.