The political affiliation of central bankers and government debt: Evidence from Africa

Using a newly constructed dataset, this paper investigates whether central bankers' characteristics which include educational and professional background and a new dimension: political affiliation, affect government debt for 31 African countries over the period 1984–2019. Our analysis relies on the assumption that when heads of state and central bankers share the same political ideology, this reduces preference divergences and gives politicians a means to exert influence over monetary policy, resulting in a high level of debt. Additionally, we argue that the extent to which political affiliation impacts government debt is conditional on the type of political regime. Our findings predict that government debt as a percentage of GDP goes up on average by more than 3 percentage points when the central banker shares the same political affiliation as the head of the executive branch and this result is driven by the democracies in our sample. Finally, our results show that the education of African central bankers has a statistically significant effect on government debt; in particular, we find that central bankers with a graduate degree are associated with a decrease in government debt relative to those with a bachelor's degree.