Working Paper No. 1053

Does Social Trust Speed up Reforms? The Case of Central-Bank Independence

Published: January 8, 2015Pages: 24Keywords: Central banks; Independence; Social trust; Inflation; Monetary policy; ReformJEL-codes: E52; E58; P48; Z13
Published version

Does Social Trust Speed up Reforms? The Case of Central-Bank Independence Niclas Berggren, Sven-Olov Daunfeldt and Jörgen Hellström


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 trust).

Niclas Berggren

Contact

Ph: +46 8 665 4520
niclas.berggren@ifn.se

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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