Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222344 
Year of Publication: 
2020
Series/Report no.: 
ECONtribute Discussion Paper No. 018
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
We document that central banks are significantly more likely to report slightly positive profits than slightly negative profits, especially amid greater political pressure, the public’s receptiveness to more extreme political views, and when governors are reappointable. The propensity to report small profits over small losses is correlated with more lenient monetary policy and higher inflation. We conclude that profitability concerns, although absent from standard theory, are present and effective in practice. These findings inform a debate about the political economy of central banking, monetary stability, and the effectiveness of non-traditional central banking.
Subjects: 
Central Banks
Profitability
Non-Traditional Central Banking
Monetary Stability
JEL: 
E58
Document Type: 
Working Paper

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