This paper assesses the effects of central bank governor appointments on financial market expectations of monetary policy. To measure these effects, we assemble a new dataset of appointment announcements from 15 countries, and conduct an event study analysis on exchange rates, bond yields, and stock prices. The analysis reveals a significant reaction of exchange rates and bond yields to unexpected appointments. The reactions are not unidirectional, and thus do not suggest new governors suffer from a generic credibility problem. Federal Reserve chairman appointments stand out in terms of their unusually pronounced effects on financial markets.
Published: Kenneth N. Kuttner & Adam S. Posen, 2010.
"Do Markets Care Who Chairs the Central Bank?,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 42(2-3), pages 347-371, 03.
This paper is available as PDF (207 K) or via email.
This paper was revised on August 8, 2008
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