When are Central Bankers Removed?

Hayat, Muhammad Azmat; Farvaque, Étienne

doi:10.3917/reco.623.0471

Cited by 7 publications

(4 citation statements)

References 9 publications

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“…With regards to the institutional commitments of a central bank, Muhammad A. Hayat and Étienne Farvaque (2011) estimated the probability of removal of a central banker in 103 countries all over the world. The main conclusion is that "'central bankers' removals are related to banking and currency crises, to elections and the change in the strength of democracy, and to inflation performance and globalization" (Hayat and Farvaque 2011).…”

Section: Trust In Institutions and Economic Outcomes: The Literature mentioning

confidence: 99%

Fiscal rules compliance and trust in institution in Eurozone: The case of European Central Bank

Canale

Liotti

2019

Panoeconomicus

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The institutional and policy features of Eurozone represent a field of special interest to analyse the process of integration. The aim of this study is to investigate on the existence of a trade-off between the compliance to fiscal rules and trust as a proxy of institutional legitimacy in Eurozone. At this scope, the relation between trust in the European Central Bank (ECB) and structural adjustment, together with unemployment and inflation in 11 Eurozone countries from 1999 to 2013, is tested. The empirical results showed that: (i) discretionary policy measures have an opposite sign impact on trust; (ii) in peripheral countries, the structural adjustment is the main variable affecting trust in ECB; (iii) unemployment plays a key role; and (iv) deviation from the objective of 2% of inflation is not significant. These outcomes prove the existence of a trade-off between the fiscal rules commitments and the European institutional consolidation process.

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Section: Trust In Institutions and Economic Outcomes: The Literature mentioning

confidence: 99%

Fiscal rules compliance and trust in institution in Eurozone: The case of European Central Bank

Canale

Liotti

2019

Panoeconomicus

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“…Among others, , 2006Rodrik & Wacziarg, 2005) analyze the relation between democracy and inequality inside the framework of game theory: it is the redistributive threat by part of the population that brings 11 A study about the institutional commitments of a Central Bank may be found in Hayat et al (2011), estimating the probability of removal of a central banker in 103 countries worldwide. The main conclusion is that "central bankers' removals are related to banking and currency crises, to elections and the change in the strength of democracy, and to inflation performance and globalization" (Hayat et al, 2011 p.17) about a democratic equilibrium 12 .…”

Section: Trust and Economic Performancementioning

confidence: 99%

Trust in Institutions and Income Inequality in the Eurozone: The Role of the Crisis

Bonasia¹,

Canale²,

Liotti³

et al. 2016

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income distribution, together with standard economic indicators such as unemployment and inflation, in the consolidation of supranational institutions. The empirical analysis also controls for financial market shocks, including domestic bond yields and stock market returns. The additional contribution is to analyze whether the sensitiveness of trust has been strengthened during the recent crisis, associating binary dummies to explanatory variables. The main conclusions can be summarized as follows: a) income inequality negatively affects trust in the EC and the EP in normal times; in crisis times, this relation is strengthened and extended to the ECB for one of the two indexes of trust considered; b) inflation and unemployment significantly affect trust in all European

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“…As the greater "illusion of precision"-type overconfidence lowers the one-period loss value as in (9), an increase in γ actually raises the benefit of keeping an incumbent central banker.…”

Section: Comparative Statics Analysismentioning

confidence: 97%

“…This study contributes by formally modeling the behavioral biases and deriving their consequences. It not only shows how the impacts of such overconfidence proceed through the whole macro-economy, but it also helps to understand an empirical puzzle, as central bankers, even though their institutions tend to become more similar (Crowe and Meade, 2007), still have different term lengths in their mandates and actual turnover rates (Hayat and Farvaque, 2011, Dreher et al, 2008, 2010.…”

Section: Introductionmentioning

confidence: 99%

Optimal Term Length for an Overconfident Central Banker

Farvaque

Matsueda

2017

Singapore Econ. Rev.

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This paper discusses the implications of overconfidence when it affects a monetary policy maker. We consider two forms of overconfidence: the illusion of precision and the illusion of control. Incorporating them into a standard New Keynesian framework, we consider the optimal term length of a central banker and examine how it depends on the types and degrees of overconfidence. In particular, we show that the legal mandate should always be lengthened when these two types of biases increase by the same percentage magnitude.

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When are Central Bankers Removed?

Cited by 7 publications

References 9 publications

Fiscal rules compliance and trust in institution in Eurozone: The case of European Central Bank

Fiscal rules compliance and trust in institution in Eurozone: The case of European Central Bank

Trust in Institutions and Income Inequality in the Eurozone: The Role of the Crisis

Optimal Term Length for an Overconfident Central Banker

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