Changes in central bank leadership and inflation dynamics

C. Richard Higgins and Irfan A. Qureshi

Southern Economic Journal, 2025, vol. 91, issue 4, 1440-1473

Abstract: The macroeconomic impact of changing central bank leadership is examined. We empirically show that frequent changes in central bank leadership are associated with more volatile inflation rates. To provide a structural explanation, we develop a new technique for estimating a nonlinear New Keynesian model where the central bank varies its response to inflation. For a mix of developed and developing countries, we find that the stance of monetary policy often changes across governor tenures; these changes explain between 10% and 23% of the variation in inflation.

Date: 2025
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https://doi.org/10.1002/soej.12763

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:91:y:2025:i:4:p:1440-1473

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