Inflation and Central Bank Independence: Conventional Wisdom Redux
AbstractUntil recently there existed a broad consensus that an important institution for combating inflation is a central bank insulated from political influence. This conventional wisdom has been challenged by, among others, Campillo and Miron (1997), who present evidence purporting to show that if an inflation regression equation is expanded to include not only their proxy for central bank independence (CBI) but other regressors as well, then the negative correlation between inflation and CBI vanishes. The present paper argues that allegations of the demise of this nexus should not be accepted uncritically. This paper, which reports the results of an analysis of covariance structures, finds a strong negative relationship between inflation and CBI.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 32 (2000)
Issue (Month): 4 (November)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Romer, 1991.
"Openness and Inflation: Theory and Evidence,"
NBER Working Papers
3936, National Bureau of Economic Research, Inc.
- Guillermo A. Calvo & Carlos A. Végh, 1994. "Inflation Stabilization And Nominal Anchors," Contemporary Economic Policy, Western Economic Association International, vol. 12(2), pages 35-45, 04.
- Summers, Robert & Heston, Alan, 1988. "A New Set of International Comparisons of Real Product and Price Levels Estimates for 130 Countries, 1950-1985," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(1), pages 1-25, March.
- Thomas D. Willett, 1998. "Credibility and Discipline Effects of Exchange Rates as Nominal Anchors: The Need to Distinguish Temporary from Permanent Pegs," The World Economy, Wiley Blackwell, vol. 21(6), pages 803-826, 08.
- Temple, Jonathan, 1998. "Central bank independence and inflation: good news and bad news," Economics Letters, Elsevier, vol. 61(2), pages 215-219, November.
- Aigner, Dennis J. & Hsiao, Cheng & Kapteyn, Arie & Wansbeek, Tom, 1984. "Latent variable models in econometrics," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 23, pages 1321-1393 Elsevier.
- Sachs, Jeffrey D, 1996. "Economic Transition and the Exchange-Rate Regime," American Economic Review, American Economic Association, vol. 86(2), pages 147-52, May.
- Kiguel, Miguel A & Liviatan, Nissan, 1992. "The Business Cycle Associated.with Exchange Rate-Based Stabilizations," World Bank Economic Review, World Bank Group, vol. 6(2), pages 279-305, May.
- Satorra, Albert & Bentler, Peter M., 1990. "Model conditions for asymptotic robustness in the analysis of linear relations," Computational Statistics & Data Analysis, Elsevier, vol. 10(3), pages 235-249, December.
- Andreas Fischer, 1996. "Central bank independence and sacrifice ratios," Open Economies Review, Springer, vol. 7(1), pages 5-18, January.
- Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
- White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
- Posen, Adam, 1998.
"Central Bank Independence and Disinflationary Credibility: A Missing Link?,"
Oxford Economic Papers,
Oxford University Press, vol. 50(3), pages 335-59, July.
- Adam Posen, 1995. "Central bank independence and disinflationary credibility: a missing link?," Staff Reports 1, Federal Reserve Bank of New York.
- Cukierman, Alex & Kalaitzidakis, Pantelis & Summers, Lawrence H. & Webb, Steven B., 1993. "Central bank independence, growth, investment, and real rates," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 95-140, December.
- Luis Ignacio JÃ¡come & Francisco F. VÃ¡zquez, 2005.
"Any Link Between Legal Central Bank Independence and Inflation? Evidence From Latin America and the Caribbean,"
IMF Working Papers
05/75, International Monetary Fund.
- Luis Jácome & Francisco Vázquez, 2005. "Any Link Between Legal Central Bank Independence and Inflation? Evidence from Latin America and the Caribbean," Macroeconomics 0508011, EconWPA.
- Axel Dreher & Jan-Egbert Sturm & Jakob de Haan, 2007.
"Does High Inflation Cause Central Bankers to Lose Their Job? Evidence Based on a New Data Set,"
KOF Working papers
07-167, KOF Swiss Economic Institute, ETH Zurich.
- Dreher, Axel & Sturm, Jan-Egbert & de Haan, Jakob, 2008. "Does high inflation cause central bankers to lose their job? Evidence based on a new data set," European Journal of Political Economy, Elsevier, vol. 24(4), pages 778-787, December.
- Axel Dreher & Jakob de Haan & Jan-Egbert Sturm, 2007. "Does High Inflation Cause Central Bankers to Lose their Job? Evidence Based on a New Data Set," CESifo Working Paper Series 2045, CESifo Group Munich.
- Brumm, Harold J., 2006. "The effect of central bank independence on inflation in developing countries," Economics Letters, Elsevier, vol. 90(2), pages 189-193, February.
- Boschen, John F. & Weise, Charles L., 2004. "Does the dynamic time consistency model of inflation explain cross-country differences in inflations dynamics?," Journal of International Money and Finance, Elsevier, vol. 23(5), pages 735-759, September.
- Mahir Binici & Yin-Wong Cheung & Kon S. Lai, 2012.
"Trade Openness, Market Competition, and Inflation : Some Sectoral Evidence from OECD Countries,"
1206, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Mahir Binici & Yin-Wong Cheung & Kon S. Lai, 2011. "Trade Openness, Market Competition, and Inflation: Some Sectoral Evidence from OECD Countries," CESifo Working Paper Series 3690, CESifo Group Munich.
- Matthew Doyle & Barry Falk, 2008.
"Testing Commitment Models of Monetary Policy: Evidence from OECD Economies,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 40(2-3), pages 409-425, 03.
- Doyle, Matthew & Falk, Barry L., 2004. "Testing Commitment Models of Monetary Policy: Evidence from OECD Economies," Staff General Research Papers 11995, Iowa State University, Department of Economics.
- Gernot Pehnelt, 2007. "Globalisation and Inflation in OECD Countries," Jena Economic Research Papers 2007-055, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Hermann Sintim-Aboagye & Chandana Chakraborty & Serapio Byekwaso, 2012. "Uncertainty of inflation and inflation rate: Does credibility of inflation policy matter?," Economic Issues Journal Articles, Economic Issues, vol. 17(2), pages 95-110, September.
- Goran Petrevski & Jane Bogoev & Bruno S. Sergi, 2012. "The link between central bank independence and inflation in Central and Eastern Europe: are the results sensitive to endogeneity issue omitted dynamics and subjectivity bias?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(4), pages 611-652, July.
- Bernard Laurens & Marco Arnone & Jean-FranÃ§ois Segalotto, 2006. "The Measurement of Central Bank Autonomy," IMF Working Papers 06/227, International Monetary Fund.
- Posso, Alberto & Tawadros, George B., 2013. "Does greater central bank independence really lead to lower inflation? Evidence from panel data," Economic Modelling, Elsevier, vol. 33(C), pages 244-247.
- Farvaque, Etienne, 2002. "Political determinants of central bank independence," Economics Letters, Elsevier, vol. 77(1), pages 131-135, September.
- Agustin Carstens & Luis I. Jacome H., 2005. "Latin American Central Bank Reform: Progress and Challenges," Macroeconomics 0509022, EconWPA.
- Aleksandra A. Maslowska, 2011. "Quest for the Best: How to Measure Central Bank Independence and Show its Relationship with Inflation," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(2), pages 132-161, August.
- Lin, Hsin-Yi, 2009. "A Revisit of the Relation between Central Bank Independence and Inflation," MPRA Paper 30398, University Library of Munich, Germany.
- Athanasios Anastasiou, 2009. "Central Bank Independence and Economic Performance," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 3(1), pages 123-156, June.
- International Monetary Fund, 2005. "Latin American Central Bank Reform," IMF Working Papers 05/114, International Monetary Fund.
- Aleksandra Maslowska, 2007. "Discussion on the Inconsistency of Central Bank Independence Measures," Discussion Papers 21, Aboa Centre for Economics.
- Brumm, Harold J., 2011. "Inflation and central bank independence: Two-way causality?," Economics Letters, Elsevier, vol. 111(3), pages 220-222, June.
- Agustín Carstens, & Luis I. Jácome, 2005. "The 1990s Institutional Reform of Monetary Policy in Latin America," Working Papers Central Bank of Chile 343, Central Bank of Chile.
If references are entirely missing, you can add them using this form.