The Gender Factor in Monetary Policy: A Diff-in-Diff Approach

The article aims to assess whether the monetary policy preferences of central bankers differ by gender. The analysis was based on an original database of 158 countries observed over the period 1980-2018 in which we collected data on every president. In the first part of the study, we defined the theoretical model of reference and the monetary policy rule that explains the relationship between inflation and the output gap. Given this policy rule, we carried out the empirical analysis and estimated differences in the policy rules between central banks with female and male presidents. We adopted an event-based strategy to estimate the change in inflation in the years that followed a change in central bank presidents as a function of the initial output gap. To identify the gender factor in monetary policy, we adopted a difference-indifferences strategy with propensity score matching. The estimates revealed that female presidents are more conservative than male presidents only when the output gap is zero and the economy is producing at its potential level. Conversely, when the economy is far from its potential level, women central bank presidents are less conservative than men. In this case, in their monetary policy choices, female presidents give more weight to the deviation of output from its potential than their male counterparts do. This implies that female central bank presidents allow inflation rates to fluctuate more than their male counterparts and are revealed to be “doves” in their monetary policy preferences. This is an innovative finding that contributes to the literature on the subject.