Once bitten, twice bold? Early life tragedy and central bankers’ reaction to COVID-19

Maqsood Aslam (1) , Etienne Farvaque (1)

1 LEM - Lille économie management - UMR 9221

Have negative experiences (in particular, natural disasters) that central bankers’ have known in their early life influenced monetary policy decisions in front of the COVID-19 pandemic? We answer this question using a sample of 19 developing countries. We show that central bankers who experienced episodes of epidemics in their early life lowered interest rates faster and lower during the COVID-19 pandemic. Personal experience of decision-makers has contributed strongly to explain their behavior during the crisis.

Mots clés: Policy rate; COVID-19; Pandemic; Central banks

Domaines: Economies et finances

Maqsood Aslam, Etienne Farvaque. Once bitten, twice bold? Early life tragedy and central bankers’ reaction to COVID-19. Finance Research Letters, 2022, 44, pp.102060. ⟨10.1016/j.frl.2021.102060⟩. ⟨hal-03267518⟩