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Succession in the Temple: Central Banker Careers and the Politics of Appointment

Given the democratic principles and economic outcomes at stake, it is surprising that there has not been a significant comparative study of how elected governments choose central bankers. In this paper, I link the preferences of elected governments and the types of central bankers they appoint. I take as my starting point that central bankers' with different career backgrounds tend to choose different monetary policies. I hypothesize that central banker appointment is partisan, with left-wing governments choosing liberal types of central bankers (e.g., former bureaucrats), and right-wing governments choosing conservative types (e.g., former private bankers). I support this claim using new data covering the appointments of more than 400 different central bankers in 20 rich democracies over the last half century. Using new techniques for analyzing compositional data, I show that central bank appointments can be best understood as a partisan phenomenon, linking the government's economic priorities and the direction of monetary policy, regardless of the legal independence of the central bank.