The discussion of the delayed lift-off in US monetary policy is just the latest episode in a long-lasting debate over the causes of inertia in monetary policy. This column approaches the issue by assuming that psychological drivers can influence the decisions of central bankers. Loss aversion is one source of behavioural bias which can explain delays in changing the stance of monetary policy, including the fear of lift-off after a recession.
Donato Masciandaro, 02 January 2017
Richard Barwell, 19 December 2016
It is generally assumed that central bankers often argue over the appropriate conduct of monetary policy. Focusing on the Bank of England’s Monetary Policy Committee, this column argues that based on what policymakers vote for, there is no evidence that they disagree with one another in any meaningful sense. Either policymakers essentially agree all the time, or they do not vote their view.
Bernhard Bartels, Barry Eichengreen, Beatrice Weder di Mauro, 14 November 2016
Recent events have heightened concerns that central banks with private shareholders might differ in their financial behaviour from purely public central banks, perhaps focusing excessively on profits, dividends, and risks to their balance sheets. Using information on shareholding and new data on governance rules for 35 central banks, this column finds no significant difference in financial behaviour based on ownership, due, it would appear, to governance arrangements restraining policy toward private shareholders and, more generally, affecting central bank behaviour.
Mark Hallerberg, Joachim Wehner, 14 February 2013
The appointments of Papademos in Greece and Monti in Italy in 2011 are examples of leadership changes meant to bring more competent people into government. This column aims at understanding why governments sometimes appoint economic policymakers with economics training but often do not. It suggests that levels of economics education among finance ministers are substantially higher in new democracies than in old ones and that the appointment of an economics PhD as a central bank president is 22% more likely during a banking crisis.