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On the relationship between central bank independence and inflation: some more bad news

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  • Kees Bouwman
  • Richard Jong-A-Pin
  • Jakob de Haan

Abstract

Using the quantile regression approach it is shown for a sample of 57 developing countries that the relationship between central bank independence and inflation over the period 1975--98 is not robust. Only in the higher quantiles do we find a significant relationship between independence and inflation. This conclusion is based on a multivariate model for inflation, in which central bank independence is proxied by the central bank turnover rate.

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Bibliographic Info

Article provided by Taylor and Francis Journals in its journal Applied Financial Economics Letters.

Volume (Year): 1 (2005)
Issue (Month): 6 (November)
Pages: 381-385

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Handle: RePEc:taf:apfelt:v:1:y:2005:i:6:p:381-385

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References

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  1. Berger, Helge & de Haan, Jakob & Eijffinger, Sylvester C W, 2001. " Central Bank Independence: An Update of Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 3-40, February.
  2. 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.
  3. Sturm, Jan-Egbert & Haan, Jakob de, 2001. "Inflation in developing countries: does Central Bank independence matter?," CCSO Working Papers 200101, University of Groningen, CCSO Centre for Economic Research.
  4. King, David & Ma, Yue, 2001. "Fiscal decentralization, central bank independence, and inflation," Economics Letters, Elsevier, vol. 72(1), pages 95-98, July.
  5. I. Fernandez-Val & J. Angrist & V. Chernozhukov, 2004. "Quantile Regression under Misspecification," Econometric Society 2004 North American Winter Meetings 198, Econometric Society.
  6. Eijffinger, S-C-W & de Haan, J, 1996. "The Political Economy of Central-Bank Independence," Princeton Studies in International Economics 19, International Economics Section, Departement of Economics Princeton University,.
  7. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  8. Brumm, Harold J., 2002. "Inflation and Central Bank independence revisited," Economics Letters, Elsevier, vol. 77(2), pages 205-209, October.
  9. Marta Campillo & Jeffrey A. Miron, 1996. "Why Does Inflation Differ Across Countries?," NBER Working Papers 5540, National Bureau of Economic Research, Inc.
  10. Temple, Jonathan, 1998. "Central bank independence and inflation: good news and bad news," Economics Letters, Elsevier, vol. 61(2), pages 215-219, November.
  11. Forder, James, 1996. "On the Assessment and Implementation of 'Institutional' Remedies," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 39-51, January.
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Cited by:
  1. Jeroen Klomp & Jakob Haan, 2010. "Central bank independence and inflation revisited," Public Choice, Springer, vol. 144(3), pages 445-457, September.
  2. Gernot Pehnelt, 2007. "Globalisation and Inflation in OECD Countries," Jena Economic Research Papers 2007-055, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Siklos, Pierre L., 2008. "No single definition of central bank independence is right for all countries," European Journal of Political Economy, Elsevier, vol. 24(4), pages 802-816, December.
  4. 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.

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