Does Social Trust Speed up Reforms? The Case of Central-Bank Independence

Niclas Berggren, Sven-Olof Daunfelt and Jörgen Hellström
Additional contact information
Sven-Olof Daunfelt: HUI Research and Dalarna University
Jörgen Hellström: Umeå University

No 1053, Working Paper Series from Research Institute of Industrial Economics

Abstract: Many countries have undertaken central-bank independence reforms, but the years of implementation differ. What explains such differences in timing? This is of interest more broadly, as it sheds light on factors that matter for the speed at which economic reforms come about. We study a rich set of potential determinants, both economic and political, but put special focus on a cultural factor, social trust. We find empirical support for an inverse u-shape: Countries with low and high social trust implemented their reforms earlier than countries with intermediate levels. We make use of two factors to explain this pattern: the need to undertake reform (which is more urgent in countries with low social trust) and the ability to undertake reform (which is greater in countries with high social trust).

Keywords: Central banks; Independence; Social trust; Inflation; Monetary policy; Reform (search for similar items in EconPapers)
JEL-codes: E52 E58 P48 Z13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-01-08
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Berggren, Niclas, Sven-Olof Daunfelt and Niclas Berggren, 'Does Social Trust Speed up Reforms? The Case of Central-Bank Independence' in Journal of Institutional Economics, 2015, pages 395-415.

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Related works:
Journal Article: Does social trust speed up reforms? The case of central-bank independence (2016)
Working Paper: Does Social Trust Speed Up Reforms? The case of Central Bank Independence (2014)
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