Party politics and the survival of central bank governors

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.

Dissecting the brains of central bankers: The case of the ECB’s Governing Council members on reforms

“…For instance, if a central bank governor has experience in the academic and the banking sectors, both background indicator variables take the value 1 15 . Finally, given that the governor of the central bank is usually appointed by the government or by parliament, that a political party tends to nominate committee members with similar preferences (Havrilesky and Gildea, 1992;Chappell et al, 1993;Vaubel, 1997;Berger and Woitek, 1997;Ennser-Jedenastik, 2014), and that partisan ideologies appear to play an important role in the monetary policy committee's voting calculus (McGregor, 1996;Neuenkirch and Neumeier, 2013), we consider that the political affiliation of the government that has appointed central banker i may have an impact on its reform proposals.…”

The Politicization of the European Central Bank: What Is It, and How to Study It?

“…Working from a different angle, Ennser‐Jedenastik () analyses politicization as a result of central bankers’ connections with political parties. Examining 30 central banks (including members of the European System of Central Banks) from 1945 to 2012, he concludes, among other things, that the existence of links between a central bank governor and a governmental party increases the chances of the former's survival in office, as a consequence of his greater responsiveness to governmental policy wishes.…”

Post‐ministerial occupation in advanced industrial democracies: Ambition, individual resources and institutional opportunity structures

“…This organisational resource gives access to party patronage – namely the ‘power of parties to appoint people to positions in public and semi‐public life’ (Kopecký & Mair : 3). Through ‘institutional control’ parties can reward their loyal members with positions in the higher echelons of public administration, the governing boards of public sector companies, advisory committees and regulatory bodies, executive positions in party foundations, as well as secure them safe positions in electoral lists (Stolz & Kintz : 5; see also Ennser‐Jedenastik ). Party office is more likely to be a key resource if held at the national level of party decision making, where the most attractive positions are usually distributed.…”