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Political Pressure on Central Banks
Author(s) -
Binder Carola Conces
Publication year - 2021
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12772
Subject(s) - politics , independence (probability theory) , monetary policy , inflation (cosmology) , face (sociological concept) , central bank , monetary economics , economics , political science , political economy , business , sociology , law , social science , statistics , physics , mathematics , theoretical physics
I construct a quarterly data set on political pressure faced by 118 central banks from 2010 to 2018 using country‐level reports. I code whether each central bank is reportedly succumbing to pressure or resisting pressure. About 10% of central banks reportedly face political pressure in an average year. Even central banks with high legal independence frequently face pressure—nearly always for looser monetary policy. Pressure on the central bank is associated with higher inflation and inflation persistence. Pressure is more likely to come from governments with left‐wing or nationalist executives, few checks and balances, or weak electoral competition.