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Misplaced childhood: When recession children grow up as central bankers

Author

Listed:
  • Etienne Farvaque

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Franck Malan

    (EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université)

  • Piotr Stanek

    (Cracow University of Economics)

Abstract

We examine how much an early – i.e., childhood – experience of recession influences the behavior of central bankers. We develop a model of decision making by a committee whose leader and members exhibit recession aversion due to their personal experience. The model reveals that recession aversion could lead to a reluctance of the policymaker to increase policy rates. In a panel multinomial logit model for nine major central banks analyzed over the period 1999–2015, we find that growing-up in a recession influences monetary policy-making. Central bankers' early personal experiences of recessions shape their policy reactions, increasing the willingness to cut policy rates, with policy-relevant magnitudes. The results are robust to alternative behavioral hypotheses, accounting for a number of control variables or sample variation.

Suggested Citation

  • Etienne Farvaque & Franck Malan & Piotr Stanek, 2020. "Misplaced childhood: When recession children grow up as central bankers," Post-Print hal-02502635, HAL.
    • Handle: RePEc:hal:journl:hal-02502635
    DOI: 10.1016/j.jedc.2019.05.004
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    Citations

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    Cited by:

    1. Maqsood Aslam & Etienne Farvaque & Franck Malan, 2021. "A disaster always rings twice: Early life experiences and central bankers' reactions to natural disasters," Kyklos, Wiley Blackwell, vol. 74(3), pages 301-320, August.
    2. Fałkowski, Jan & Lewkowicz, Jacek & Hardt, Łukasz & Słysz, Bartosz, 2025. "Do appointing institutions influence monetary policy? Evidence from voting patterns in the Polish Monetary Policy Council," European Journal of Political Economy, Elsevier, vol. 89(C).
    3. Strong, Christine & Gakpa, Lewis-Landry, 2023. "Crisis babies, inflation experience, and the electoral cycle evidence from Africa," Finance Research Letters, Elsevier, vol. 58(PD).
    4. Strong, Christine & Gakpa, Lewis-Landry, 2025. "Early-Life currency crises and exchange rate pass-through: Understanding the impact of central Bankers’ formative years in Africa," Journal of International Money and Finance, Elsevier, vol. 157(C).
    5. Aslam, Maqsood & Farvaque, Etienne, 2022. "Once bitten, twice bold? Early life tragedy and central bankers’ reaction to COVID-19," Finance Research Letters, Elsevier, vol. 44(C).
    6. Bruno Beltrão Léo & Maria Teresa Vieira Campos Proença & Carlos Francisco Ferreira Alves, 2025. "Central bank committee decision-making: a systematic literature review and research agenda," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(3), pages 320-339, September.
    7. Kokoszczyński, Ryszard & Mackiewicz-Łyziak, Joanna, 2024. "Making monetary policy in Poland: Are Polish hawks and doves different?," European Journal of Political Economy, Elsevier, vol. 81(C).
    8. Davide Romelli & Hamza Bennani, 2021. "Disagreement inside the FOMC: New Insights from Tone Analysis," Trinity Economics Papers tep1021, Trinity College Dublin, Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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