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The political economy of reforms in central bank design: evidence from a new dataset

Department of Economics Seminar

Dr Davide Romelli
Department of Economics, Trinity College Dublin


The political economy of reforms in central bank design: evidence from a new dataset

Date: Friday 25th January, 14h00-15h00
Venue: Kemmy Business School, KB1-11

All are welcome to attend.


Davide Romelli is an Assistant Professor of Economics at Trinity College Dublin and a co-founder of IM-TCD (Trinity College Dublin's International Macroeconomics Research Unit). His research focuses on international finance and macroeconomics, central banking and financial supervision. Davide holds a PhD in Economics from ESSEC Business School and THEMA-University of Cergy-Pontoise. More information on his research can be found at his personal website http://www.davideromelli.com/. Abstract What accounts for the worldwide changes in central bank design over the past four decades? Using a new dataset on central bank institutional design, this paper investigates the timing, pace and magnitude of reforms in a sample of 154 countries over the period 1972-2017. I construct a new dynamic index of central bank independence and show that initial reforms that increase the level of independence, as well as a regional convergence, represent important drivers of changes in central bank design. Similarly, an external pressure to reform, such as an IMF loan program, also increases the likelihood of reforms, while political factors or crises episodes have little impact. These results are robust to controlling for the direction and size of reforms, alternative indices of central bank independence and estimation strategies.