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Party politics and the survival of central bank governors

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Abstract

Legally independent central banks leave elected politicians with little direct control over monetary policy. The most important indirect channel of influence for governments thus consists in appointing ‘responsive’ central bank officials and removing ‘hostile’ ones. This premise is tested by examining the effect of partisan ties between central bank governors and governments or presidents in 30 European democracies between 1945 and 2012. Drawing on an original dataset containing information on the party affiliations of 195 governors, event history models are employed to show that affiliation with a party represented in the executive (the government or the presidency) has a large and significant positive effect on governor survival. However, affiliation with an opposition party only increases governors' hazards during the first four years of their term, suggesting that the impact of the party label may be overridden as more reliable information about a governor becomes available.

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