| Comparative studies of central banks emphasize independence from the government, but ignores what central bankers wish to do with their independence, instead assuming central bankers are uniformly conservative. This assumption turns out to be untenable. I show we can measure, explain, and predict the preferences of central bankers by drawing on their career paths. Career backgrounds socialize some central bankers (e.g., former private bankers) into monetary conservativism. Career trajectories also provide clues to future career ambitions: many central bankers aspire to lucrative jobs in the financial sector, or further prestigious government posts, and these ambitions give banks and governments a hidden avenue of influence as "shadow principals" of the central bank.; New data from twenty industrialized countries over a half century reveal a strong, robust relationship between central bankers' career backgrounds and inflation outcomes, interest rates, monetary policy votes, and individual central bankers' revealed preferences. The impact of career conservatism rivals central bank independence, and extends even to developing countries, where past efforts to explain central bank behavior have failed. The preferences of central bankers also interact with institutions. Central bankers' political independence determines how much their conservatism suppresses inflation, and the structure of wage bargaining determines whether conservative monetary policies exact an unemployment cost. Finally, studying central banker conservatism reveals that even independent central banks are responsive to the democratic process through appointments. The strongest and most robust determinant of the choice of central bankers by career type is the left-right partisanship of government.; To comprehend the politics of monetary policy---from the selection of central bankers and central bank institutions, to the management of the economy---we need to understand the preferences of the central bank officials who actually make monetary policy. The lesson for institutional political economy, and especially studies of delegation, is to pay closer attention to the interests of policy agents. |
