Pub Date : 2025-04-01Epub Date: 2025-01-23DOI: 10.1016/j.ejpoleco.2025.102649
Ivo Bischoff, Sourav Das, Reinhold Kosfeld
We ask whether inter-municipal cooperation serve as a platform by which municipalities coordinate tax policies and reduce the intensity of tax competition. Specifically, we focus on inter-municipal cooperation in form of inter-local industrial parks. We apply the case study-oriented synthetic control method (SCM) to analyze the causal impact of 12 inter-local industrial parks on municipal tax-setting behavior using data on municipalities from West-German states of Hesse and North Rhine Westphalia between 2000 and 2018. We find evidence that inter-local industrial parks lead to tax coordination in some occasions but not in others. Our ex post analysis suggests that tax coordination only takes place in specific political constellations.
{"title":"Does inter-municipal cooperation reduce the intensity of tax competition? Evidence on inter-local industrial parks in Germany","authors":"Ivo Bischoff, Sourav Das, Reinhold Kosfeld","doi":"10.1016/j.ejpoleco.2025.102649","DOIUrl":"10.1016/j.ejpoleco.2025.102649","url":null,"abstract":"<div><div>We ask whether inter-municipal cooperation serve as a platform by which municipalities coordinate tax policies and reduce the intensity of tax competition. Specifically, we focus on inter-municipal cooperation in form of inter-local industrial parks. We apply the case study-oriented synthetic control method (SCM) to analyze the causal impact of 12 inter-local industrial parks on municipal tax-setting behavior using data on municipalities from West-German states of Hesse and North Rhine Westphalia between 2000 and 2018. We find evidence that inter-local industrial parks lead to tax coordination in some occasions but not in others. Our ex post analysis suggests that tax coordination only takes place in specific political constellations.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102649"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143600552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-03-28DOI: 10.1016/j.ejpoleco.2025.102671
Tibor Rutar
Does economic freedom come at the expense of women's economic rights, or does it instead help improve them? Presently, there are almost no studies investigating this issue, and what evidence exists is mostly correlational. This paper presents findings from matching analyses with the explicit aim of addressing the likely endogenous relationship between economic freedom and respect for women's economic rights. Using the latest data (up to 2022), estimates from matching methods, as well as supplementary regressions based on conditional mixed-processes, all point to economic freedom having an improving effect. Two components of economic freedom – sound money and freedom of international trade – seem most likely to drive the aggregate result. The uncovered positive aggregate effect is robust to an extensive set of control variables, tweaks in the operationalization of treatment, and varying the post-treatment period.
{"title":"Do large, sustained economic freedom reforms hurt or improve women's economic rights?","authors":"Tibor Rutar","doi":"10.1016/j.ejpoleco.2025.102671","DOIUrl":"10.1016/j.ejpoleco.2025.102671","url":null,"abstract":"<div><div>Does economic freedom come at the expense of women's economic rights, or does it instead help improve them? Presently, there are almost no studies investigating this issue, and what evidence exists is mostly correlational. This paper presents findings from matching analyses with the explicit aim of addressing the likely endogenous relationship between economic freedom and respect for women's economic rights. Using the latest data (up to 2022), estimates from matching methods, as well as supplementary regressions based on conditional mixed-processes, all point to economic freedom having an improving effect. Two components of economic freedom – sound money and freedom of international trade – seem most likely to drive the aggregate result. The uncovered positive aggregate effect is robust to an extensive set of control variables, tweaks in the operationalization of treatment, and varying the post-treatment period.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102671"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143715156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-04-16DOI: 10.1016/j.ejpoleco.2025.102670
Pinar Deniz , Thanasis Stengos
This study revisits the drivers of income inequality with political institutions at the core. We take a multidimensional institutional approach by defining political institutions in terms of governance, political freedom, political fragmentation and political scale. We carry out an extensive empirical analysis of the role of political institutions by decomposing it into distinct elements and providing available proxies for each dimension. Considering the difficulty and the lack of consensus and clarity regarding model selection in the literature, we follow a model averaging methodology to deal with the issue of model uncertainty and model specification that impacts the role of institutions. We combine an analysis of club convergence, a clustering mechanism according to the long term income trajectories of the countries, with Bayesian Model Averaging (BMA) to determine the most important variables that affect inequality out of a large set of potential determinants for each homogeneous country clusters in terms of their development path. Our results show that drivers of income inequality do not act the same irrespective of different economic development patterns and that there is no “one size fits all” policy prescription that links political institutions and income inequality.
{"title":"Heterogeneity of institutions and model uncertainty in the income inequality nexus","authors":"Pinar Deniz , Thanasis Stengos","doi":"10.1016/j.ejpoleco.2025.102670","DOIUrl":"10.1016/j.ejpoleco.2025.102670","url":null,"abstract":"<div><div>This study revisits the drivers of income inequality with political institutions at the core. We take a multidimensional institutional approach by defining political institutions in terms of governance, political freedom, political fragmentation and political scale. We carry out an extensive empirical analysis of the role of political institutions by decomposing it into distinct elements and providing available proxies for each dimension. Considering the difficulty and the lack of consensus and clarity regarding model selection in the literature, we follow a model averaging methodology to deal with the issue of model uncertainty and model specification that impacts the role of institutions. We combine an analysis of club convergence, a clustering mechanism according to the long term income trajectories of the countries, with Bayesian Model Averaging (BMA) to determine the most important variables that affect inequality out of a large set of potential determinants for each homogeneous country clusters in terms of their development path. Our results show that drivers of income inequality do not act the same irrespective of different economic development patterns and that there is no “one size fits all” policy prescription that links political institutions and income inequality.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102670"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143838383","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Social media allow political campaigns to reach specific groups of voters with unprecedented precision, yet the effect on voting behaviour of this political micro-targeting is still uncertain. To identify this effect we match survey data with a novel indicator of Facebook political ads intensity, based on audience-specific ad prices and collected during the 2016 US presidential campaign. We find that being exposed to Facebook micro-targeted ads reduced the likelihood of persuading Democrat respondents to cast the ballot in favour of the Democrat candidate and, on the other hand, it increased the likelihood of persuading Republicans and residents of traditionally red or swing states to switch their vote in favour of Mr Trump. A counterfactual analysis exercise exploring the effect on voter mobilisation and persuasion of varying the intensity of political campaigning on Facebook confirms that Trump was the primary beneficiary of micro-targeted ad campaigns on Facebook.
{"title":"Politics in the facebook era. Evidence from the 2016 US presidential elections","authors":"Federica Liberini , Michela Redoano , Antonio Russo , Angel Cuevas , Ruben Cuevas","doi":"10.1016/j.ejpoleco.2025.102641","DOIUrl":"10.1016/j.ejpoleco.2025.102641","url":null,"abstract":"<div><div>Social media allow political campaigns to reach specific groups of voters with unprecedented precision, yet the effect on voting behaviour of this political micro-targeting is still uncertain. To identify this effect we match survey data with a novel indicator of Facebook political ads intensity, based on audience-specific ad prices and collected during the 2016 US presidential campaign. We find that being exposed to Facebook micro-targeted ads reduced the likelihood of persuading Democrat respondents to cast the ballot in favour of the Democrat candidate and, on the other hand, it increased the likelihood of persuading Republicans and residents of traditionally red or swing states to switch their vote in favour of Mr Trump. A counterfactual analysis exercise exploring the effect on voter mobilisation and persuasion of varying the intensity of political campaigning on Facebook confirms that Trump was the primary beneficiary of micro-targeted ad campaigns on Facebook.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102641"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143628136","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-03-27DOI: 10.1016/j.ejpoleco.2025.102669
Zeeshan Hashim , Jan Fidrmuc , Sugata Ghosh
In democracies, policies are jointly shaped by voters' preferences and politicians' (or parties’) ideological biases. We explore the relative importance of the latter on some key economic outcomes – growth rate, inflation and inequality – in a broad sample of 71 democracies from 1995 to 2019. We find evidence that both left-wing and right-wing governments deliver convergent outcomes as regards growth, inflation and inequality. The same applies to the policy outcome of economic freedom. This indicates that consolidated democracies maintain continuity in economic policies, and a change in government from one political ideology to another with a different ideology does not significantly alter economic policy outcomes. However, we find divergence in hybrid regimes; inequality and economic freedom are reduced under leftist governments, and economic freedom is enhanced by rightist governments.
{"title":"Political parties’ ideological bias and convergence in economic outcome","authors":"Zeeshan Hashim , Jan Fidrmuc , Sugata Ghosh","doi":"10.1016/j.ejpoleco.2025.102669","DOIUrl":"10.1016/j.ejpoleco.2025.102669","url":null,"abstract":"<div><div>In democracies, policies are jointly shaped by voters' preferences and politicians' (or parties’) ideological biases. We explore the relative importance of the latter on some key economic outcomes – growth rate, inflation and inequality – in a broad sample of 71 democracies from 1995 to 2019. We find evidence that both left-wing and right-wing governments deliver convergent outcomes as regards growth, inflation and inequality. The same applies to the policy outcome of economic freedom. This indicates that consolidated democracies maintain continuity in economic policies, and a change in government from one political ideology to another with a different ideology does not significantly alter economic policy outcomes. However, we find <em>divergence</em> in hybrid regimes; inequality and economic freedom are reduced under leftist governments, and economic freedom is enhanced by rightist governments.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102669"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143768069","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-03-17DOI: 10.1016/j.ejpoleco.2025.102663
Shinya Inukai
Many countries face the prospect of shrinking populations. I use a unique event—the publication of a list of Japanese municipalities at risk of extinction by 2040—to estimate the impacts of declining populations on municipalities and housing markets using difference-in-differences models. The results show that the shock increases of 23.5% in regional development spending and 11.5% in child-oriented spending and a decrease of 3.67% in housing sales prices. Notably, by using the score information calculated for the judgment of possible extinction, I obtain a consistent result when limiting the sample to municipalities with a score close to the judgment threshold. This supports the interpretation that the effects on local government policy and housing markets are due to the adverse signal caused by the list publication rather than the demographic trends.
{"title":"How do local governments and housing markets respond to demographic information shocks? Evidence from Japan’s Extinction Risk List","authors":"Shinya Inukai","doi":"10.1016/j.ejpoleco.2025.102663","DOIUrl":"10.1016/j.ejpoleco.2025.102663","url":null,"abstract":"<div><div>Many countries face the prospect of shrinking populations. I use a unique event—the publication of a list of Japanese municipalities at risk of extinction by 2040—to estimate the impacts of declining populations on municipalities and housing markets using difference-in-differences models. The results show that the shock increases of 23.5% in regional development spending and 11.5% in child-oriented spending and a decrease of 3.67% in housing sales prices. Notably, by using the score information calculated for the judgment of possible extinction, I obtain a consistent result when limiting the sample to municipalities with a score close to the judgment threshold. This supports the interpretation that the effects on local government policy and housing markets are due to the adverse signal caused by the list publication rather than the demographic trends.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102663"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143682251","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-05-02DOI: 10.1016/j.ejpoleco.2025.102674
Yosef Bonaparte
We utilize panel data from 60 countries to analyze whether the political system -presidential versus parliamentary-impacts stock market volatility. Our findings show that presidential systems exhibit lower volatility compared to parliamentary systems. We identify two main factors underlying this result: political stability and coalition dependence. Specifically, presidential systems demonstrate greater political stability and less coalition dependence, which contribute to reduced stock market volatility. Additionally, we show that the lower stock market volatility in presidential systems does not come at the cost of stock market performance. In fact, some evidence suggests that presidential systems positively enhance stock market performance. Our results are statistically significant and robust, accounting for subsamples and employing various specifications and econometric models, including a global portfolio that establishes each country's Beta. Collectively, our study highlights the significant role of political systems in the study of law and finance.
{"title":"Presidential versus parliamentary: Political system and stock market volatility","authors":"Yosef Bonaparte","doi":"10.1016/j.ejpoleco.2025.102674","DOIUrl":"10.1016/j.ejpoleco.2025.102674","url":null,"abstract":"<div><div>We utilize panel data from 60 countries to analyze whether the political system -presidential versus parliamentary-impacts stock market volatility. Our findings show that presidential systems exhibit lower volatility compared to parliamentary systems. We identify two main factors underlying this result: political stability and coalition dependence. Specifically, presidential systems demonstrate greater political stability and less coalition dependence, which contribute to reduced stock market volatility. Additionally, we show that the lower stock market volatility in presidential systems does not come at the cost of stock market performance. In fact, some evidence suggests that presidential systems positively enhance stock market performance. Our results are statistically significant and robust, accounting for subsamples and employing various specifications and econometric models, including a global portfolio that establishes each country's Beta. Collectively, our study highlights the significant role of political systems in the study of law and finance.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102674"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143900082","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-03-14DOI: 10.1016/j.ejpoleco.2025.102664
Jakub Bartak , Łukasz Jabłoński , Katarzyna Obłąkowska
The paper examines public preferences for fiscal policy in Poland using two complementary Adaptive Choice-Based Conjoint (ACBC) experiments on a representative sample of Polish adults. The first experiment – the expenditure conjoint – tests whether and how much respondents are willing to pay in higher taxes to secure additional public services in several crucial domains. The second experiment – the tax conjoint – follows up on these findings by asking how citizens would prefer to pay, testing support for alternative tax solutions. Each proposed tax package is budget neutral, but varies in how burdens are distributed, allowing for an assessment of progressive versus regressive preferences. The study finds support for increased government spending in key policy areas (defense, health, education, and pensions), accompanied by a willingness to finance these expansions through higher taxes. Despite the conventional view of Poland as tax-averse, many respondents appear willing to accept higher taxes if they perceive tangible returns. The results show also a clear preference for tax solutions that shift the burden toward better-off individuals and enhance tax progression. Overall, these findings suggest that, even in tax-skeptical contexts, public preferences can align in favor of higher taxes when benefits are clearly communicated and fairness concerns are addressed.
{"title":"Fiscal policy preferences: Evidence from conjoint experiments in Poland","authors":"Jakub Bartak , Łukasz Jabłoński , Katarzyna Obłąkowska","doi":"10.1016/j.ejpoleco.2025.102664","DOIUrl":"10.1016/j.ejpoleco.2025.102664","url":null,"abstract":"<div><div>The paper examines public preferences for fiscal policy in Poland using two complementary Adaptive Choice-Based Conjoint (ACBC) experiments on a representative sample of Polish adults. The first experiment – the expenditure conjoint – tests whether and how much respondents are willing to pay in higher taxes to secure additional public services in several crucial domains. The second experiment – the tax conjoint – follows up on these findings by asking how citizens would prefer to pay, testing support for alternative tax solutions. Each proposed tax package is budget neutral, but varies in how burdens are distributed, allowing for an assessment of progressive versus regressive preferences. The study finds support for increased government spending in key policy areas (defense, health, education, and pensions), accompanied by a willingness to finance these expansions through higher taxes. Despite the conventional view of Poland as tax-averse, many respondents appear willing to accept higher taxes if they perceive tangible returns. The results show also a clear preference for tax solutions that shift the burden toward better-off individuals and enhance tax progression. Overall, these findings suggest that, even in tax-skeptical contexts, public preferences can align in favor of higher taxes when benefits are clearly communicated and fairness concerns are addressed.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102664"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143682250","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-03-08DOI: 10.1016/j.ejpoleco.2025.102662
Jiajun Han , Yuan Zhang
Once education is devoid of liberty-related concepts, like civil liberty and nonconformity, could it still change attitudes to homosexuality, especially in developing countries? Using China's enactment of compulsory schooling laws in the 1980s, which shaped noticeable kinks with less evident jumps in educational attainment across cohorts, this paper shows that an improvement in education increased tolerance towards homosexuality, measured in the 2010s, by employing a regression probability jump and kink design. Assessing distributional effects, the marginal treatment effect approach suggests the liberalizing effects of secondary education are most pronounced for those with the highest resistance to high school completion. Furthermore, the education-boosted preference for internet usage, richness of cultural activities, gentler ambience of working and egalitarian gender view might underlie the potential mechanism.
{"title":"Education and tolerance towards Homosexuality—Evidence from China","authors":"Jiajun Han , Yuan Zhang","doi":"10.1016/j.ejpoleco.2025.102662","DOIUrl":"10.1016/j.ejpoleco.2025.102662","url":null,"abstract":"<div><div>Once education is devoid of liberty-related concepts, like civil liberty and nonconformity, could it still change attitudes to homosexuality, especially in developing countries? Using China's enactment of compulsory schooling laws in the 1980s, which shaped noticeable kinks with less evident jumps in educational attainment across cohorts, this paper shows that an improvement in education increased tolerance towards homosexuality, measured in the 2010s, by employing a regression probability jump and kink design. Assessing distributional effects, the marginal treatment effect approach suggests the liberalizing effects of secondary education are most pronounced for those with the highest resistance to high school completion. Furthermore, the education-boosted preference for internet usage, richness of cultural activities, gentler ambience of working and egalitarian gender view might underlie the potential mechanism.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102662"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143600467","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-04-01Epub Date: 2025-04-30DOI: 10.1016/j.ejpoleco.2025.102668
Lauren Leek , Simeon Bischl
Although central bank communication is a core monetary policy and accountability tool for central banks, little is known about what shapes it. This paper develops and tests a theory regarding a previously unconsidered variable: central bank independence (CBI). We argue that increases in CBI alter the pressures central banks face, compelling them to address these pressures to maintain their reputation. We fine-tune and validate a Large Language Model (Google’s Gemini) to develop novel textual indices of policy pressures regarding monetary policy communication of central banks in speeches of 100 central banks from 1997 to 2023. Employing a staggered difference-in-differences and an instrumental variable approach, we find robust evidence that an increase in independence decreases the narrow focus on price stability and increases financial pressures discussed in monetary policy communication. These results are not, as generally is assumed, confounded by general changes in communication over time or singular events, in particular, the Global Financial Crisis.
{"title":"How central bank independence shapes monetary policy communication: A Large Language Model application","authors":"Lauren Leek , Simeon Bischl","doi":"10.1016/j.ejpoleco.2025.102668","DOIUrl":"10.1016/j.ejpoleco.2025.102668","url":null,"abstract":"<div><div>Although central bank communication is a core monetary policy and accountability tool for central banks, little is known about what shapes it. This paper develops and tests a theory regarding a previously unconsidered variable: central bank independence (CBI). We argue that increases in CBI alter the pressures central banks face, compelling them to address these pressures to maintain their reputation. We fine-tune and validate a Large Language Model (Google’s Gemini) to develop novel textual indices of policy pressures regarding monetary policy communication of central banks in speeches of 100 central banks from 1997 to 2023. Employing a staggered difference-in-differences and an instrumental variable approach, we find robust evidence that an increase in independence decreases the narrow focus on price stability and increases financial pressures discussed in monetary policy communication. These results are not, as generally is assumed, confounded by general changes in communication over time or singular events, in particular, the Global Financial Crisis.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102668"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143886683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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