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

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Author Info

  • Matthias Neuenkirch

    ()
    (University of Aachen)

  • Florian Neumeier

    ()
    (University of Marburg)

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.

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File URL: https://www.uni-marburg.de/fb02/makro/forschung/magkspapers/36-2013_neuenkirch.pdf
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201336.

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Length: 12 pages
Date of creation: 2013
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201336

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

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  1. Belke, Ansgar & Potrafke, Niklas, 2012. "Does government ideology matter in monetary policy? A panel data analysis for OECD countries," Munich Reprints in Economics 20245, University of Munich, Department of Economics.
  2. Stephen Hansen & Michael McMahon, 2012. "First Impressions Matter: Signalling as a Source of Policy Dynamics," CESifo Working Paper Series 3782, CESifo Group Munich.
  3. Mark Harris & Paul Levine & Christopher Spencer, 2011. "A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members," Public Choice, Springer, vol. 146(3), pages 413-442, March.
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Cited by:
  1. Matthias Neuenkirch & Peter Tillmann, 2013. "Superstar Central Bankers," MAGKS Papers on Economics 201354, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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