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dc.contributor.authorRueda R., Miguel Ricardoen_US
dc.description.abstractThis paper studies the relationship between the hazard rate of the exit of a president of a central bank and a measure of credibility in monetary policy. The expected hazard rate of exit is estimated as a function of legal and political variables. The measure of credibility is the expected probability of a disinflation beginning when inflation is rising. For a sample of 22 Latin American and G7 countries, I find a negative relationship between the hazard rate of exit and the measure of credibility. This provides evidence of the expected relationship between independence and credibility not found in previous cross country studies. Using the executive's party ideology as a measure of aversion to inflation, there was no evidence that this relationship is different for countries where the government is identified as more conservative. However, when a president of the central bank appointed by a conservative government is in office, a rise in the probability of a disinflation beginning when inflation was rising was found. The results show that legal independence after controlling for the hazard rate of the president's exit is not associated with credibility gains.en_US
dc.publisher|aInter-American Development Bank, Research Dep. |cWashington, DCen_US
dc.relation.ispartofseries|aWorking paper // Inter-American Development Bank, Research Department |x639en_US
dc.subject.keywordcentral bank independenceen_US
dc.subject.keywordcentral bankersen_US
dc.titleBreaking credibility in monetary policy: The role of politics in the stability of the central bankeren_US
dc.typeWorking Paperen_US

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