Social Trust and Central-Bank Independence

Reprint No. 2014:25

Author(s): Niclas Berggren, Sven-Olov Daunfeldt and Jörgen HellströmYear: 2014 Title: European Journal of Political Economy Volume (No.): 34 (June) Pages: 425–439
Online article (restrictions may apply)
Preliminary version

Central banks have become more independent in many countries. A common rationale has been the existence of a credibility (or lack-of-trust) problem for monetary policy. This indicates a possible and until now unexplored link between social trust and central-bank independence. Our empirical findings, based on data from 149 countries, confirm such a link, in the form of a u-shaped relationship. We suggest that two factors help explain this finding: the need for this kind of reform and the ability with which it can be implemented. At low trust, the need for central-bank independence is sufficiently strong to bring it about, in spite of a low ability to undertake reform. At high trust, the ability to undertake reform is sufficiently strong to bring high independence about, in spite of a low need for it. At intermediate trust levels, lastly, neither need nor ability is strong enough to generate very independent central banks.

Berggren, Niclas, Sven-Olov Daunfeldt and Jörgen Hellström (2014), "Social Trust and Central-Bank Independence". European Journal of Political Economy 34(June), 425–439.

Niclas Berggren


Ph: +46 8 665 4520

Interdisciplinary European Studies

Trust in the European Union in Challenging Times


This is the first book in the Interdisciplinary European Studies collection. This volume provides an interdisciplinary perspective on trust in the EU from the vantage point of political science, law and economics. Lars Oxelheim, Lund University and affiliated to IFN, is one of the authors.


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se