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Does High Inflation Cause Central Bankers to Lose Their Job? Evidence Based on a New Data Set

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Abstract

This paper introduces new data on the term in office of central bank governors in 137 countries for 1970-2004. Our panel models show that the probability that a central bank governor is replaced in a particular year is positively related to the share of the term in office elapsed, political and regime instability, the occurrence of elections, and inflation. The latter result suggests that the turnover rate of central bank governors (TOR) is a poor indicator of central bank independence. This is confirmed in models for cross-section inflation in which TOR becomes insignificant once its endogeneity is taken into account.

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  • Axel Dreher & Jan-Egbert Sturm & Jakob de Haan, 2007. "Does High Inflation Cause Central Bankers to Lose Their Job? Evidence Based on a New Data Set," KOF Working papers 07-167, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:07-167
    DOI: 10.3929/ethz-a-005389453
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    More about this item

    Keywords

    Central bank governors; Central bank independence; Inflation;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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