Central bank independence: Public perceptions and global trends

A new dataset on de jure central bank independence (CBI)

In this paper, Ana Carolina Garriga corrects and expands previous datasets, notably Garriga (2016) as it includes 54 more countries and  codes central bank statutes and identifies reforms affecting CBI and their direction for 9,109 country-year observations.

Methodology:

• Dataset: The paper covers 192 countries from 1970 to 2023.
• Coding process: The dataset codes four dimensions of CBI: personnel independence, central bank objectives, policy formulation independence, and limits on lending to the government. These dimensions are scored from 0 (no independence) to 1 (maximum independence) and aggregated into two overall CBI indices: an unweighted index and a weighted index giving more weight to lending restrictions.
• Data collection: The data collection involved manually coding over 2,400 central bank statutes and legal documents between 2020 and 2024. The process included targeted searches to identify earlier reforms by tracing modifications or replacements of laws.

Findings:

1. Global trends: Despite a global trend towards increased CBI, there is significant variance across and within regions. Notably, numerous reforms have reduced CBI in the past two decades.
2. Regional variance: The dataset highlights that countries previously omitted from other datasets, often from the developing world, tend to have lower CBI levels. This suggests that previous research may have overestimated global CBI levels due to systematically missing data.
3. Temporal coverage: The extended temporal coverage allows for analysis of central bank governance changes since the Global Financial Crisis, including the COVID-19 pandemic and recent inflation surges. Since 2000, there were 174 reforms affecting CBI:  24% of them restricted the CBI weighted index, but many reforms that increased the overall CBI score also restricted CBI in at least one of its dimensions.

Revisiting Central Bank Independence in the World: An Extended Dataset
Authors: Ana Carolina Garriga
From: University of Essex

Factors influencing public support for CBI

Matthew DiGiuseppe, Ana Carolina Garriga, and Andreas Kern explore the factors influencing public support for CBI. The authors conducted a preregistered survey experiment using a non-probability representative sample from Prolific during the 2024 U.S. Presidential Campaign. This timing allowed them to present narratives suggesting that either candidate could win, enhancing their ability to assess views on reducing the Federal Reserve’s independence. The survey was administered in two phases: before and after the election. This design helped assess how political outcomes influence support for CBI.

Findings:

1. Impact of information on support for: The study found that support for curtailing CBI decreases significantly when respondents learn that the Executive Branch would gain more power if independence is reduced. This suggests that citizens are more likely to support CBI when they understand the political implications of reducing it.
2. Partisan influence: The results also indicate that partisan identification plays a role in shaping opinions about CBI. Post-election, Democrats increased support for CBI, while Republicans decreased it, reflecting the influence of partisan control over the executive branch.
3. Limitations of central bank communication: The study highlights the importance of information in shaping public attitudes toward CBI but also notes limitations in how central bank transparency and communication can influence these attitudes, especially across partisan lines.

Information, Party Politics, and Public Support for Central Bank Independence
Authors: Matthew DiGiuseppe, Ana Carolina Garriga, Andreas Kern
From: Leiden University, University of Essex, Georgetown University