The Technical Competence of Economic Policy-Makers in Developed Democracies

Abstract:     
When do governments appoint “technically competent” economic policy-makers? Our model focuses on why governments would normally want a specialist in economics over a generalist with more political skills (the demand side) and when such leaders are available (the supply side). Our analysis of data for 1200 economic policy-makers from EU and OECD democracies since 1973 has seven main findings. First, governments appoint more technically competent economic policy-makers during financial crises. Second, Eurozone countries are less likely to have prime ministers with an economics education. Third, new democracies select more technically competent leaders. Fourth, left governments appoint more technically competent finance ministers in years with a stock market crash. Fifth, presidential systems have more technically competent finance ministers. Sixth, the longer a government is in office, the less technically competent are finance ministers appointed, but the more competent are central bankers. Finally, average tertiary education levels correlate negatively with technical competence.

Number of Pages in PDF File: 38

Keywords: Economic policy, Leaders, Education, Occupation, Financial crises

working papers series