There Is No (Depression) Childhood's End, for Central Bankers too
In this study, we examine how much an early – i.e., childhood - experience of recession influences the behavior of central bankers. To exhibit if such an effect exists, we analyze the determinants of the interest rate setting by central banks in a discrete-choice modeling framework, augmented by the influence of the chairperson characteristics. In a panel multinomial logit model for nine major central banks analyzed over the period 1999-2012, we verify that growing-up in a recession matters. Central bankers early personal experiences of economic fluctuations thus shape the policy reactions of their institutions, and the impacts have policy-relevant magnitudes.