Tuesday, June 2, 6.00 pm, Room B217, LAPE, Université de Limoges

(In)dependant Central Banks

Vasso Ioannidou, Bayes Business School (formerly Cass); Centre for Economic Policy Research (CEPR)

Sotirios Kokas, University of Essex – Essex Business School

Thomas Lambert, Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Alexander Michaelides, Imperial College Business School; Centre for Economic Policy Research (CEPR)

Abstract

Since the 1980s, many countries have reformed their central banks to enhance operational independence. Using biographical data, press coverage, and expert opinions, we find that during this period, appointments of central bank governors became increasingly politically motivated, particularly following legislative reforms intended to insulate central banks and their governors from political interference. Furthermore, we show that politically motivated appointments are associated with lower de facto independence and worse economic and financial outcomes. As central banks worldwide have gained greater power, our findings contribute to the debate on their democratic accountability and credibility.