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Public knowledge about and attitudes towards central bank independence in New Zealand

Bernd Hayo () and Florian Neumeier ()

Journal of Banking & Finance, 2020, vol. 113, issue C

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-orientated 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; Bank of New Zealand Act; Public attitude; Policy targets 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)
Date: 2020
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DOI: 10.1016/j.jbankfin.2020.105737

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Handle: RePEc:eee:jbfina:v:113:y:2020:i:c:s0378426620300042