Comparative analysis of the impact of central bank governor turnover on monetary stability

Andriana Milošević; Marina Đorđević

doi:10.71159/icemit2543M

Authors

Andriana Milošević University of Niš,Faculty of Economics, Serbia
Marina Đorđević University of Niš, Faculty of Economics, Niš, Serbia

DOI:

https://doi.org/10.71159/icemit2543M

Keywords:

independence, central bank, inflation, independence index, econometric analysis

Abstract

A high level of institutional independence enhances the effectiveness of maintaining price stability, which positively affects broader macroeconomic stability. However, changing conditions in financial markets and crisis situations often require coordination between monetary and fiscal policies. A high degree of institutional independence is a significant determinant of low and stable inflation in developed countries. In developing countries, a more relevant indicator is the turnover rate (TOR). Moreover, there are considerable discrepancies between factual and institutional independence, with this discrepancy being more pronounced in developing countries, which are often forced to align the monetary policy with the development policy of the government. The aim of this research is to identify and analyze the existence of a positive relationship between the turnover rate of central bank governors (TOR) and inflation. The analysis includes the National Bank of Serbia (NBS) and the European Central Bank (ECB) as representatives of countries at different stages of development. Descriptive analysis and Pearson correlation were employed, with results indicating a positive link between a higher turnover rate of governors and elevated inflation levels, particularly in the case of the NBS.

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