The Political Economy of Reforms in Central Bank Design: Evidence from a New Dataset

49 Pages Posted: 28 Aug 2018

See all articles by Davide Romelli

Davide Romelli

Trinity College (Dublin) - Department of Economics; Trinity College (Dublin)

Date Written: August 1, 2018


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.

Keywords: Central banks, central bank independence, central bank governance, legislative reforms

JEL Classification: E58, G28, N20, P16

Suggested Citation

Romelli, Davide, The Political Economy of Reforms in Central Bank Design: Evidence from a New Dataset (August 1, 2018). BAFFI CAREFIN Centre Research Paper No. 2018-87. Available at SSRN: or

Davide Romelli (Contact Author)

Trinity College (Dublin) - Department of Economics ( email )

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Trinity College (Dublin) ( email )

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