Transitions in Central Bank Leadership: Empirics and a Simple Theory

Advisor: Carlos Viana de Carvalho

Co-advisor: Eduardo Zilberman

The importance assigned to the identity of a central banker demonstrates that transitions of central bank leadership are an important aspect of monetary policy. This has been overlooked by the literature. Our paper analyses these issues within empirical and theoretical frameworks. We provide empirical evidence, within a country panel, that transition periods are associated with a more contractionary monetary policy stance. We then develop a model of monetary policy temporal inconsistency to show how a departing central banker can, by distorting his 
nal decisions, aff ect the public's beliefs about his successor: a reputation transfer takes place