IDEAS home Printed from https://ideas.repec.org/a/wly/reggov/v7y2013i2p195-214.html
   My bibliography  Save this article

Shall the law set them free? The formal and actual independence of regulatory agencies

Author

Listed:
  • Chris Hanretty
  • Christel Koop

Abstract

Regulation by independent agencies, rather than ministries, is believed to result in better policy outcomes. Yet this belief requires one to accept a complex causal chain leading from formal independence to actual independence from politics, to policy decisions, and, ultimately, to policy outcomes. In this study, we analyze the link between the formal and actual independence of regulatory agencies in Western Europe. New data on the appointment of chief executives of these agencies is used to create a proxy for the actual independence of agencies from politics. The analysis demonstrates that formal independence is an important determinant of actual independence, but the rule of law and the number of veto players matter as well.

Suggested Citation

  • Chris Hanretty & Christel Koop, 2013. "Shall the law set them free? The formal and actual independence of regulatory agencies," Regulation & Governance, John Wiley & Sons, vol. 7(2), pages 195-214, June.
    • Handle: RePEc:wly:reggov:v:7:y:2013:i:2:p:195-214
    DOI: 10.1111/j.1748-5991.2012.01156.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1748-5991.2012.01156.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1748-5991.2012.01156.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:gig:joupla:v:2:y:2010:i:1:p:3-30 is not listed on IDEAS
    2. Morten Egeberg & Jarle Trondal, 2009. "Political leadership and bureaucratic autonomy. Effects of agencification," ARENA Working Papers 9, ARENA.
    3. Hanretty, Chris, 2010. "Explaining the De Facto Independence of Public Broadcasters," British Journal of Political Science, Cambridge University Press, vol. 40(1), pages 75-89, January.
    4. repec:dgr:rugccs:200101 is not listed on IDEAS
    5. Miguel A. Montoya & Francesc Trillas, 2009. "The measurement of regulator independence in practice: Latin America and the Caribbean," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 4(1/2), pages 113-134.
    6. Giandomenico Majone, 1996. "Temporal Consistency and Policy Credibility: Why Democracies Need Non-Majoritarian Institutions," EUI-RSCAS Working Papers 57, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    7. Morris Fiorina, 1982. "Legislative choice of regulatory forms: Legal process or administrative process?," Public Choice, Springer, vol. 39(1), pages 33-66, January.
    8. Bawn, Kathleen, 1995. "Political Control Versus Expertise: Congressional Choices about Administrative Procedures," American Political Science Review, Cambridge University Press, vol. 89(1), pages 62-73, March.
    9. Cukierman Alex, 1992. "CENTRAL BANK STRATEGY, CREDIBILITY, AND INDEPENDANCE: THEORY AND EVIDENCE: Compte Rendu par Dominique Cariofillo," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 581-590, December.
    10. Cukierman, Alex & Webb, Steven B, 1995. "Political Influence on the Central Bank: International Evidence," The World Bank Economic Review, World Bank, vol. 9(3), pages 397-423, September.
    11. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    12. Hayo, Bernd & Voigt, Stefan, 2007. "Explaining de facto judicial independence," International Review of Law and Economics, Elsevier, vol. 27(3), pages 269-290, September.
    13. ELGIE, ROBERT & McMENAMIN, IAIN, 2005. "Credible Commitment, Political Uncertainty or Policy Complexity? Explaining Variations in the Independence of Non-majoritarian Institutions in France," British Journal of Political Science, Cambridge University Press, vol. 35(3), pages 531-548, July.
    14. Dreher, Axel & Sturm, Jan-Egbert & de Haan, Jakob, 2008. "Does high inflation cause central bankers to lose their job? Evidence based on a new data set," European Journal of Political Economy, Elsevier, vol. 24(4), pages 778-787, December.
    15. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," The World Bank Economic Review, World Bank, vol. 6(3), pages 353-398, September.
    16. Keefer, Philip & Stasavage, David, 2003. "The Limits of Delegation: Veto Players, Central Bank Independence, and the Credibility of Monetary Policy," American Political Science Review, Cambridge University Press, vol. 97(3), pages 407-423, August.
    17. Srebrnik, Henry, 2004. "Small Island Nations and Democratic Values," World Development, Elsevier, vol. 32(2), pages 329-341, February.
    18. Kutsal Yesilkagit & Sandra Thiel, 2008. "Political Influence and Bureaucratic Autonomy," Public Organization Review, Springer, vol. 8(2), pages 137-153, June.
    19. Jan-Egbert Sturm & Jakob de Haan, 2001. "Inflation in Developing Countries: Does Central Bank Independence Matter?," CESifo Working Paper Series 511, CESifo.
    20. Hall, Peter A. & Gingerich, Daniel W., 2009. "Varieties of Capitalism and Institutional Complementarities in the Political Economy: An Empirical Analysis," British Journal of Political Science, Cambridge University Press, vol. 39(3), pages 449-482, July.
    21. Johan P. Olsen, 2009. "Democratic government, institutional autonomy and the dynamics of change," ARENA Working Papers 1, ARENA.
    22. Mark L. Defond & Mingyi Hung, 2004. "Investor Protection and Corporate Governance: Evidence from Worldwide CEO Turnover," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 269-312, May.
    23. Tsebelis, George, 1995. "Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multipartyism," British Journal of Political Science, Cambridge University Press, vol. 25(3), pages 289-325, July.
    24. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, December.
    25. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mustafa Kadir DOĞAN & Funda ALTUN, 2024. "Impact of Corruption on Utility Prices: A Theoretical and Empirical Analysis for the Electricity Markets," Sosyoekonomi Journal, Sosyoekonomi Society, issue 32(60).
    2. Jacek LEWKOWICZ & Katarzyna METELSKA-SZANIAWSKA, 2021. "De Jure and De Facto Institutions: Implications for Law and for Economics," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 6, pages 758-776.
    3. Dawn Walsh & Natascha S Neudorfer, 2024. "Caring is sharing: Why independent commissions in post-conflict societies have power-sharing arrangements," Journal of Peace Research, Peace Research Institute Oslo, vol. 61(5), pages 760-777, September.
    4. M. Kerem Coban, 2024. "Rethinking de facto autonomy? A multi‐policy area approach and the regulatory policy process," Review of Policy Research, Policy Studies Organization, vol. 41(3), pages 508-530, May.
    5. Cyril Benoît, 2021. "Politicians, regulators, and regulatory governance: The neglected sides of the story," Regulation & Governance, John Wiley & Sons, vol. 15(S1), pages 8-22, November.
    6. Matthias Thiemann & Bart Stellinga, 2023. "Between technocracy and politics: How financial stability committees shape precautionary interventions in real estate markets," Regulation & Governance, John Wiley & Sons, vol. 17(2), pages 531-548, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Crowe, Christopher & Meade, Ellen E., 2008. "Central bank independence and transparency: Evolution and effectiveness," European Journal of Political Economy, Elsevier, vol. 24(4), pages 763-777, December.
    2. Donato Masciandaro & Davide Romelli, 2019. "Behavioral Monetary Policymaking: Economics, Political Economy and Psychology," World Scientific Book Chapters, in: Behavioral Finance The Coming of Age, chapter 9, pages 285-329, World Scientific Publishing Co. Pte. Ltd..
    3. Mattia Guidi, 2015. "The Impact of Independence on Regulatory Outcomes: the Case of EU Competition Policy," Journal of Common Market Studies, Wiley Blackwell, vol. 53(6), pages 1195-1213, November.
    4. Davide Romelli, 2022. "The political economy of reforms in Central Bank design: evidence from a new dataset," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(112), pages 641-688.
    5. Michael Berlemann & Kai Hielscher, 2016. "Measuring Effective Monetary Policy Conservatism of Central Banks: A Dynamic Approach," Annals of Economics and Finance, Society for AEF, vol. 17(1), pages 105-132, May.
    6. Michael Berlemann & Kai Hielscher, 2013. "Effective Monetary Policy Conservatism: A Comparison of 13 OECD Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(3), pages 267-290, July.
    7. Jeroen Klomp & Jakob De Haan, 2010. "Inflation And Central Bank Independence: A Meta‐Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 593-621, September.
    8. Berlemann, Michael & Hielscher, Kai, 2009. "Measuring Effective Monetary Policy Conservatism," Working Paper 89/2009, Helmut Schmidt University, Hamburg.
    9. Hielscher, Kai & Markwardt, Gunther, 2012. "The role of political institutions for the effectiveness of central bank independence," European Journal of Political Economy, Elsevier, vol. 28(3), pages 286-301.
    10. Bernd Hayo & Stefan Voigt, 2008. "Inflation, Central Bank Independence, and the Legal System," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(4), pages 751-777, December.
    11. Donato Masciandaro & Davide Romelli, 2018. "Beyond the Central Bank Independence Veil: New Evidence," BAFFI CAREFIN Working Papers 1871, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    12. Cukierman, Alex, 2008. "Central bank independence and monetary policymaking institutions -- Past, present and future," European Journal of Political Economy, Elsevier, vol. 24(4), pages 722-736, December.
    13. Guillermo Vuletin & Ling Zhu, 2011. "Replacing a “Disobedient” Central Bank Governor with a “Docile” One: A Novel Measure of Central Bank Independence and Its Effect on Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(6), pages 1185-1215, September.
    14. Qureshi, Irfan, 2015. "Monetary Policy Shifts and Central Bank Independence," MPRA Paper 81646, University Library of Munich, Germany, revised Sep 2017.
    15. Garriga, Ana Carolina & Rodriguez, Cesar M., 2020. "More effective than we thought: Central bank independence and inflation in developing countries," Economic Modelling, Elsevier, vol. 85(C), pages 87-105.
    16. Berlemann, Michael & Hielscher, Kai, 2011. "A Time-varying Indicator of Effective Monetary Policy Conservatism," Working Paper 112/2011, Helmut Schmidt University, Hamburg.
    17. MARTÍNEZ-RUIZ, Elena & NOGUES-MARCO, Pilar, 2018. "The Political Economy of Exchange Rate Stability During the Gold Standard. Spain 1874—1914," Discussion paper series HIAS-E-75, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    18. Jamus Jerome Lim, 2021. "The limits of central bank independence for inflation performance," Public Choice, Springer, vol. 186(3), pages 309-335, March.
    19. Masciandaro, Donato & Romelli, Davide, 2015. "Ups and downs of central bank independence from the Great Inflation to the Great Recession: theory, institutions and empirics," Financial History Review, Cambridge University Press, vol. 22(3), pages 259-289, December.
    20. Carola Conces Binder, 2021. "Political Pressure on Central Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(4), pages 715-744, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:reggov:v:7:y:2013:i:2:p:195-214. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1748-5991 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.