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Central Bank Independence And Price Stability Under Alternative Political Regimes: A Global Evidence

Author

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  • Afees A. Salisu

    (University of Pretoria, South Africa)

  • Elias A. Udeaja

    (Central Bank of Nigeria)

  • Silva Opuala-Charles

    (Garden City Premier Business School, Port Harcourt, Nigeria)

Abstract

In this paper, we explore the connection between Central Bank Independence (CBI) and inflation under alternative political regimes. We formulate a predictive model that accommodates CBI in the analysis of inflation and thereafter we regroup the countries based on the choice of political regimes as well as the level of development. We find that CBI has a statistically significant and negative effect on inflation in countries adopting full democratic and partial autocratic regimes; but are statistically insignificant in countries operating full autocratic and partial democratic regimes. The results leading to this conclusion are robust to different levels of development.

Suggested Citation

  • Afees A. Salisu & Elias A. Udeaja & Silva Opuala-Charles, 2022. "Central Bank Independence And Price Stability Under Alternative Political Regimes: A Global Evidence," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(2), pages 155-172, August.
    • Handle: RePEc:idn:journl:v:25:y:2022:i:2b:p:155-172
    DOI: https://doi.org/10.21098/bemp.v25i2.2004
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    More about this item

    Keywords

    Central bank independence; Price stability; Democratic regime; Autocratic regime; Panel data analysis;
    All these keywords.

    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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