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Paper Autonomy, Private Ambition: Theory and Evidence Linking Central Bankers' Careers and the Economy
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Paper Autonomy, Private Ambition:
Theory and Evidence Linking Central Bankers’
Careers and Economic Performance
∗
Christopher Adolph
†
Harvard University
August 6, 2003
Abstract.
Central bankers’ careers are shown to influence inflation outcomes. I presenttwo theories in which careers explain central bank behavior, develop themin a game theoretic model, and test them using a comprehensive new dataset of central bankers’ career backgrounds which spans twenty rich democ-racies and half a century. Career experiences vary considerably over thissample, and not only mould beliefs about appropriate policy (the social-ization hypothesis), but also shape career concerns for central bankers whoseek career advancement in either the financial sector or government (thecareer incentives hypothesis). Accordingly, time series cross-section anal-ysis of inflation shows central bankers with financial sector backgroundspreside over lower inflation, while central bankers with bureaucratic experi-ence produce higher inflation. The magnitude of career effects on inflationis on par with standard measures of central bank independence, and inter-active models suggest both socialization and incentives contribute to thesecareer effects. The study of central banks in particular and bureaucracyin general should pay greater attention to individual preferences and theirinteraction with organizations; institutions alone are not enough.
∗
Prepared for the Annual Meeting of the American Political Science Association, August 28–31, 2003, held in
Philadelphia. An earlier version of this paper was presented at the Comparative Political Economy Workshop,Cornell University, October 25-26, 2002. I thank Torben Iversen, Peter Hall, Jim Alt, Michael Hiscox, RobFannion, Gary King, Amanda Friedenberg, Katerina Linos, Joe Foudy, Dan Gingerich, and Victor Shih for helpfulsuggestions and conversations over the long gestation of this project. I am grateful for the translation assistanceof Christian Brunelli (Japanese) and Dean Hunt (Swedish). I am especially endebted to the Center for BasicResearch in the Social Sciences and the Multidisciplinary Program in Inequality and Social Policy, both of HarvardUniversity, and the National Science Foundation for supporting this research.
†
Ph.D. Candidate, Department of Goverment. (Littauer Center, North Yard, Harvard University, Cambridge
MA 02138; http://chris.adolph.name, ## email not listed ##).
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| | Authors: Adolph, Christopher. |
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Paper Autonomy, Private Ambition:
Theory and Evidence Linking Central Bankers’
Careers and Economic Performance
∗
Christopher Adolph
†
Harvard University
August 6, 2003
Abstract.
Central bankers’ careers are shown to influence inflation outcomes. I present
two theories in which careers explain central bank behavior, develop them
in a game theoretic model, and test them using a comprehensive new data
set of central bankers’ career backgrounds which spans twenty rich democ-
racies and half a century. Career experiences vary considerably over this
sample, and not only mould beliefs about appropriate policy (the social-
ization hypothesis), but also shape career concerns for central bankers who
seek career advancement in either the financial sector or government (the
career incentives hypothesis). Accordingly, time series cross-section anal-
ysis of inflation shows central bankers with financial sector backgrounds
preside over lower inflation, while central bankers with bureaucratic experi-
ence produce higher inflation. The magnitude of career effects on inflation
is on par with standard measures of central bank independence, and inter-
active models suggest both socialization and incentives contribute to these
career effects. The study of central banks in particular and bureaucracy
in general should pay greater attention to individual preferences and their
interaction with organizations; institutions alone are not enough.
∗
Prepared for the Annual Meeting of the American Political Science Association, August 28–31, 2003, held in
Philadelphia. An earlier version of this paper was presented at the Comparative Political Economy Workshop,
Cornell University, October 25-26, 2002. I thank Torben Iversen, Peter Hall, Jim Alt, Michael Hiscox, Rob
Fannion, Gary King, Amanda Friedenberg, Katerina Linos, Joe Foudy, Dan Gingerich, and Victor Shih for helpful
suggestions and conversations over the long gestation of this project. I am grateful for the translation assistance
of Christian Brunelli (Japanese) and Dean Hunt (Swedish). I am especially endebted to the Center for Basic
Research in the Social Sciences and the Multidisciplinary Program in Inequality and Social Policy, both of Harvard
University, and the National Science Foundation for supporting this research.
†
Ph.D. Candidate, Department of Goverment. (Littauer Center, North Yard, Harvard University, Cambridge
MA 02138; http://chris.adolph.name, ## email not listed ##).
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