Resource title

Do markets care about central bank governor changes?: evidence from emerging markets

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Resource description

Central bank governor changes in emerging markets may convey important signals about future monetary policy. Based on a new daily data set, this paper examines the reactions of foreign exchange markets, domestic stock market indices and sovereign bond spreads to central bank governor changes. The data cover 20 emerging markets over the period 1992-2006. We find that the replacement of a central bank governor negatively affects financial markets on the announcement day. This negative effect is mainly driven by irregular changes, i.e., changes occurring before the scheduled end of tenure, sending negative signals about perceived central bank independence. Personal characteristics of the central banker, to the contrary, are less important for market reactions. We find no evidence that changes in the central banker s conservatism affect the reactions of the markets. Finally, market reactions are similar in countries with high and low degrees of central bank independence.

Resource author

Christoph Moser, Axel Dreher

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26221

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Adapt according to the presented license agreement and reference the original author.