The Impact of War on Central Bank Independence

This book investigates whether interstate war reduces de jure central bank independence (CBI). Drawing on theories of monetary delegation and war finance, it argues that armed conflicts may weaken monetary autonomy through increased fiscal pressure, executive power consolidation and crisis-induced institutional change.Using a country-year panel dataset combining the CBI data project (Romelli, 2025) with UCDP/PRIO and Correlates of War conflict data, the analysis applies fixed-effects regressions and dynamic event-study methods. The results show that war entry is associated with a negative but statistically insignificant change in de jure CBI.Dynamic and descriptive evidence reveals substantial heterogeneity: while some countries experience institutional declines, many show no change and some even strengthen independence after conflict. The findings suggest that interstate war does not systematically reduce legal central bank independence, but that institutional responses are conditional on domestic political and fiscal contexts.