The political economy of central bank independence

Central bank independence, which increased over the past 50 years around the world, has recently come under pressure. There have been numerous studies about the consequences of independence for monetary authorities, but the causes of reform have received less attention. Davide Romelli investigates why and how central bank reforms come about, using a cross-country database on the timing of legislative changes. He identifies a number of challenges, including the increase in nationalism, the large build-up of sovereign debt, and climate change.