Central bank Independence in New Zealand: Public Knowledge About and Attitude Towards the Policy Target Agreement

Bernd Hayo and Florian Neumeier ()

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Employing unique representative survey data from New Zealand collected in 2016 and 2019, we study public knowledge about and attitude towards a specific monetary policy institution, the Policy Targets Agreement (PTA). We assess how much the population knows about the PTA and also ask whether our respondents support a clause in the PTA that allows the government to over-ride the RBNZ if the government deems it necessary. Responses to that question are interpreted as attitudes towards central bank independence (CBI). Using logit regression, we study which characteristics make people favour more CBI. Subjective and objective knowledge about the RBNZ and monetary policy increases support for CBI, whereas voting for a national-oriented party and trusting the government reduces it. We then investigate how the 2018 amendment of the Reserve Bank of New Zealand Act of 1989, effective April 2019, affected answers. The population does not have a clear view on whether CBI should be expanded; instead, people’s attitudes seems to be dominated by a status-quo view. Overall, our results raise doubts that the PTA had a strong impact on anchoring inflation expectations among households.

Keywords: Central Bank Independence; Public Attitude; Policy Target Agreement; Economic Literacy; New Zealand; Monetary Policy; Household Survey (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 Z1 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Working Paper: Central Bank Independence in New Zealand: Public Knowledge About and Attitude Towards the Policy Target Agreement (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201829

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