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

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  • Hayo, Bernd
  • Neumeier, Florian

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.

Suggested Citation

  • Hayo, Bernd & Neumeier, Florian, 2020. "Public knowledge about and attitudes towards central bank independence in New Zealand," Journal of Banking & Finance, Elsevier, vol. 113(C).
    • Handle: RePEc:eee:jbfina:v:113:y:2020:i:c:s0378426620300042
    DOI: 10.1016/j.jbankfin.2020.105737
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    References listed on IDEAS

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    Cited by:

    1. Alan S. Blinder & Michael Ehrmann & Jakob de Haan & David-Jan Jansen, 2024. "Central Bank Communication with the General Public: Promise or False Hope?," Journal of Economic Literature, American Economic Association, vol. 62(2), pages 425-457, June.
    2. Reinsberg, Bernhard & Kern, Andreas & Rau-Göhring, Matthias, 2021. "The political economy of IMF conditionality and central bank independence," European Journal of Political Economy, Elsevier, vol. 68(C).
    3. Hayo, Bernd & Méon, Pierre-Guillaume, 2024. "Preaching to the agnostic: Inflation reporting can increase trust in the central bank but only among people with weak priors," Journal of International Money and Finance, Elsevier, vol. 142(C).
    4. Hwang, In Do & Lustenberger, Thomas & Rossi, Enzo, 2023. "Central bank communication and public trust: The case of ECB speeches," Journal of International Money and Finance, Elsevier, vol. 137(C).
    5. Hayo, Bernd, 2023. "Does the ECB's monetary policy affect personal finances and economic inequality? A household perspective from Germany," Economic Modelling, Elsevier, vol. 129(C).
    6. Dräger, Lena, 2023. "Central Bank Communication with the General Public," Hannover Economic Papers (HEP) dp-713, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    7. D. Masciandaro, 2019. "What Bird Is That? Central Banking And Monetary Policy In The Last Forty Years," BAFFI CAREFIN Working Papers 19127, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    8. Ehrmann, Michael & Georgarakos, Dimitris & Kenny, Geoff, 2023. "Credibility gains from communicating with the public: evidence from the ECB’s new monetary policy strategy," Working Paper Series 2785, European Central Bank.

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    More about this item

    Keywords

    Central bank independence; Bank of New Zealand Act; Public attitude; Policy targets agreement; Economic literacy; New Zealand; Monetary policy; Household survey;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • Z1 - Other Special Topics - - Cultural Economics

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