Abstract

http://ssrn.com/abstract=2177829
 
 

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Establishing a Hawkish Reputation: Interest Rate Setting by Newly Appointed Central Bank Governors


Matthias Neuenkirch


University of Trier - Faculty of Economics

August 1, 2013

MAGKS Joint Discussion Paper Series in Economics No. 46-2012

Abstract:     
In this paper, we explore the interest rate setting behavior of newly appointed central bank governors. We use the Kuttner and Posen (2010) sample, which covers 15 OECD countries, and estimate an augmented Taylor (1993) rule for the period 1974–2008. We find, first, that newly appointed governors fight inflation more aggressively during the first four to eight quarters of their tenure in an effort to establish a reputation for being inflation averse. Second, we find a significantly stronger reaction to inflation by newly appointed governors working within monetary policy frameworks comprised of an at least partly independent central bank and an explicit nominal anchor.

Number of Pages in PDF File: 18

Keywords: central bank governors, credibility, inflation, monetary policy, reputation, Taylor rules

JEL Classification: E31, E43, E52, E58

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Date posted: November 20, 2012 ; Last revised: August 2, 2013

Suggested Citation

Neuenkirch, Matthias, Establishing a Hawkish Reputation: Interest Rate Setting by Newly Appointed Central Bank Governors (August 1, 2013). MAGKS Joint Discussion Paper Series in Economics No. 46-2012. Available at SSRN: http://ssrn.com/abstract=2177829 or http://dx.doi.org/10.2139/ssrn.2177829

Contact Information

Matthias Neuenkirch (Contact Author)
University of Trier - Faculty of Economics ( email )
Universitätsring 15
Trier, 54296
Germany
+49 - (0)651 - 201 - 2629 (Phone)
+49 - (0)651 - 201 - 3934 (Fax)
HOME PAGE: http://www.uni-trier.de/index.php?id=50130
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