High inflation drives countries to insulate monetary policy from democratic control

Evidence

Less extreme examples involve reforms of economic institutions. … For instance, often Central Banks have been made more independent, in order to “insulate” monetary policy, in periods of very high inflation, that is in periods where anti-inflationary policies have an especially high γ. … The most famous example involves the Bundesbank and the German hyperinflation. — Philippe Aghion, Alberto Alesina, and Francesco Trebbi, Endogenous Political Institutions, 191

Categorization

• XREF: Connects to standard accounts of central bank independence and the Bundesbank’s post-hyperinflation mandate.