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The political economy of reforms in central bank design: evidence from a new dataset

Davide Romelli ()

Economic Papers from Trinity College Dublin, Economics Department

Abstract: What accounts for the worldwide changes in central bank design over the past four decades? Using a new dataset on central bank institutional design, this paper investigates the timing, pace and magnitude of reforms in a sample of 154 countries over the period 1972-2017. I construct a new dynamic index of central bank independence and show that initial reforms that increase the level of independence, as well as a regional convergence, represent important drivers of changes in central bank design. Similarly, an external pressure to reform, such as an IMF loan program, also increases the likelihood of reforms, while political factors or crises episodes have little impact. These results are robust to controlling for the direction and size of reforms, alternative indices of central bank independence and estimation strategies.

Keywords: central banks; central bank independence; central bank governance; legislative reforms. (search for similar items in EconPapers)
JEL-codes: E58 G28 N20 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-his and nep-mac
Date: 2018-09
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep0918

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