Central Bank Independence and Democracy: Does Corporatism Matter?
AbstractIn this paper we test the hypothesis that central bank independence is closely correlated to social agreement about decisions on income distribution. Using data from a panel of OECD countries over the period 1972-2002 and controlling for several macroeconomic factors, we find evidence in favour of this hypothesis. When some indexes of corporatism are used to allow for the degree of social agreement on income distribution and its determination, the relationship between inflation and CBI weakens considerably. This evidence is consistent with the mechanism posited in Pittaluga - Cama (2004) according to which society formally endows the central bank with independence in order to safeguard a key principle of democracy, namely that decision-makers should be clearly responsible for their choices and actions.
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Bibliographic InfoArticle provided by Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore in its journal Rivista Internazionale di Scienze Sociali.
Volume (Year): 115 (2007)
Issue (Month): 4 ()
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inflation; central bank independence; corporatism; wage bargaining;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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- Jane Bogoev & Goran Petrevski & Bruno S. Sergi, 2012. "Investigating the Link Between Central Bank Independence and Inflation in Central and Eastern Europe," Eastern European Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 50(4), pages 78-96, July.
- 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., M.E. Sharpe, Inc., vol. 34(4), pages 611-652, July.
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