Party Affiliation Rather than Former Occupation: The Background of Central Bank Governors and its Effect on Monetary Policy

24 Pages Posted: 31 Jul 2013

See all articles by Matthias Neuenkirch

Matthias Neuenkirch

University of Trier - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: July 30, 2013

Abstract

In this paper, we analyze the relationship between certain characteristics of incumbent central bank governors and their interest-rate-setting behavior. We focus on (i) occupational backgrounds, (ii) party affiliation, and (iii) experience in office and estimate augmented Taylor rules for 20 OECD countries and the period 1974-2008. Our findings are as follows. First, the tenures of central bank governors who are affiliated with a political party are characterized by a relatively dovish monetary policy stance, irrespective of their partisan ideology. Second, party affiliation appears to be more important than occupational background, i.e., all bankers with(out) a party affiliation behave very similarly to each regardless of their specific occupational background. Third, party members react significantly less to inflation and more to output the longer they stay in office.

Keywords: Central Bank Governors, Monetary Policy, Occupation, Partisanship, Taylor Rules

JEL Classification: E31, E43, E52, E58

Suggested Citation

Neuenkirch, Matthias and Neumeier, Florian, Party Affiliation Rather than Former Occupation: The Background of Central Bank Governors and its Effect on Monetary Policy (July 30, 2013). Available at SSRN: https://ssrn.com/abstract=2303629 or http://dx.doi.org/10.2139/ssrn.2303629

Matthias Neuenkirch (Contact Author)

University of Trier - Faculty of Economics ( email )

Universit├Ątsring 15
Trier, 54296
Germany
+49 - (0)651 - 201 - 2629 (Phone)

HOME PAGE: http://www.uni-trier.de/index.php?id=50130

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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