Abstract
Goodhart and Lastra (Open Econ Rev 29:49–68, 2018) lay out the mechanisms through which populist political movements may affect central bank independence. This paper provides the first empirical evidence that one aspect commonly attributed to populism, namely national identity politics, has indeed negatively impacted on central bank independence in developing countries. Combining existing datasets on central bank independence and political variables in developing countries, panel regressions are run for a sample of 113 countries during 1975–2012. Results prove robust to various specifications and macroeconomic as well as institutional control variables.
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Notes
The significance of lagged inflation varies particularly much across the specifications. This is in line with Garriga (2016), who finds that the explanatory power of inflation for CBI is very sensitive to sample choice.
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Acknowledgements
This work has benefitted from helpful comments from Deniz Igan, Hiroko Oura, Helene Poirson Ward and Vikram Haksar. I would also like to thank the referee, Charles Goodhart, for his comments on the paper. Tania Mohd Nor provided excellent research assistance.
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The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.
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This comment refers to the article available at https://doi.org/10.1007/s11079-017-9447-y.
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Agur, I. Populism and Central Bank Independence: Comment. Open Econ Rev 29, 687–693 (2018). https://doi.org/10.1007/s11079-018-9497-9
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DOI: https://doi.org/10.1007/s11079-018-9497-9