HUI Working Papers, HUI Research
Does Social Trust Speed Up Reforms? The case of Central Bank Independence
(), Sven-Olov Daunfeldt
() and Jörgen Hellström
Abstract: Many countries have undertaken central-bank independence
reforms, but the years of implementation differ. What explains such
differences in timing? This is of interest more broadly, as it sheds light
on factors that matter for the speed at which economic reforms come about.
We study a rich set of potential determinants, both economic and political,
but put special focus on a cultural factor, social trust. We find empirical
support for an inverse u-shape: Countries with low and high social trust
implemented their reforms earlier than countries with intermediate levels.
We make use of two factors to explain this pattern: the need to undertake
reform (which is more urgent in countries with low social trust) and the
ability to undertake reform (which is greater in countries with high social
Keywords: Central banks; Independence; Social trust; Inflation; Monetary policy; Reform; (follow links to similar papers)
JEL-Codes: E52; E58; P48; Z13; (follow links to similar papers)
24 pages, December 22, 2014
- This paper is published as:
Bergren, Niclas, Sven-Olov Daunfeldt and Jörgen Hellström, (2016), 'Does Social Trust Speed Up Reforms? The case of Central Bank Independence', Journal of Institutional Economics, Vol. 12, June, No. 2, pages 395-415
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