Dragging a heavy load to the central bank:influence of experienced natural and man-made disasters on central bankers’ behaviour

ABSTRACT

How do natural and man-made disasters faced by central bankers in their impressionable years influence their decision-making? Using data on a large panel of central bankers from developing and developed countries, we find that central bankers who have experienced a larger number of natural as well as man-made disasters tend to act in a more conservative way. In particular, the experience of famines is the most traumatizing and influential. The results are robust to the inclusion of control variables and alternative measures of disasters, and reveal strong behavioural differences when comparing before and after the 2008 financial crisis. JEL codes: E02; E58; E71; 01

KEYWORDS:

• Conservatism
• inflation
• natural disasters
• wars
• hyperinflation

JEL CLASSIFICATION:

• E58
• O10
• E02
• E71

Acknoweldgement

The authors acknowledge very useful feedbacks from the referee of the journal. We acknowledge financial support from the National Science Centre Poland, Harmonia program, Grant/Award Number: 2018/30/M/ HS4/00896. The usual disclaimers apply.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the narodowe centrum nauki [Harmonia Program, Grant 2018/30/M/ HS4/00896].