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Does central bank independence reflect monetary commitment properly? Methodical considerations

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  • Andreas Freytag

    ()
    (UniversitŠt zu Kšln, Institut FŸr Wirtscha'tspolitik, Kšln (Germany))

Abstract

Central bank independence (CBI) has attracted much attention in economics and politics in recent years. The concept is based on the political economy literature onmonetary policy. In this paper, we argue that CBI is an incomplete approximation to legal monetary commitment. We first discuss the nature and criteria ofcommitment, then show the shortcomings of the most important indices of CBI before we introduce an alternative measure of legal monetary commitment. This measure is more comprehensive and includes more aspects of commitment than the indices of CBI. A first empirical comparison of this index and a leading CBI index strengthens the argument.

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Bibliographic Info

Article provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.

Volume (Year): 54 (2001)
Issue (Month): 217 ()
Pages: 181-208

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Handle: RePEc:psl:bnlqrr:2001:22

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Keywords: Monetary Policy; Monetary; Policy;

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Cited by:
  1. Andreas Freytag & Friedrich Schneider, 2007. "Monetary Commitment, Institutional Constraints and Inflation: Empirical Evidence for OECD Countries since the 1970s," CESifo Working Paper Series 2001, CESifo Group Munich.
  2. Ansgar Belke & Andreas Freytag & Johannes Keil & Friedrich Schneider, 2012. "The Credibility of Monetary Policy Announcements - Empirical Evidence for OECD Countries since the 1960s," Global Financial Markets Working Paper Series 2012-34, Friedrich-Schiller-University Jena.
  3. Bernd Hayo & Stefan Voigt, 2005. "Inflation, Central Bank Independence and the Legal System," Money Macro and Finance (MMF) Research Group Conference 2005 57, Money Macro and Finance Research Group.
  4. Marc-André Gosselin, 2007. "Central Bank Performance under Inflation Targeting," Working Papers 07-18, Bank of Canada.
  5. Andreas Freytag, 2005. "The credibility of monetary reform – New evidence," Public Choice, Springer, vol. 124(3), pages 391-409, September.
  6. Libich, Jan & Nguyen, Dat & Stehlik, Petr, 2014. "Monetary Exit and Fiscal Spillovers," MPRA Paper 57266, University Library of Munich, Germany.
  7. Andreas Freytag, 2004. "EMU Enlargement: Which Concept of Convergence to Apply?," Jenaer Schriften zur Wirtschaftswissenschaft 11/2004, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.

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