The Bundesbank's path to independence: Evidence from the 1950s

The German Bundesbank is frequently called the world's most independent and conservative central bank. Taking account of the path dependency of this reputation, both quantitative data and qualitative data-on German central bank law and political conflicts are used to determine the factors that contributed to this reputation in the 1950s. It is shown that quantitative analysis has its limits and that law might be a misleading indicator in this respect. It is rather the analysis of policy conflicts between the Bundesbank and the government that yields information on the bank's path to independence.