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The effects of central banks' independence on inflation outcomes in emerging countries: Does the choice of exchange regime matter?

Author

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  • Jamal Bouoiyour

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Refk Selmi

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

This chapter considers the benefits and the drawbacks of the choice of exchange regime on the central bank independence effects on inflation outcomes. The analysis of data of inflation, central bank independence, exchange regime either fixed or floating and other explanatory variables of twelve emerging countries from 1991 to 2009 provides strong support for the theoretical viewpoint, whereby regulatory separation exerts a substantial effect on inflation dynamic. More precisely, this study explores empirical evidence that low inflation outcomes may be achieved by setting up central bank independence which itself should be accompanied by pegged exchange regime. Furthermore, we note that matter which classification is employed either de facto or de jure, the effect of regulatory separation on inflation outcomes is lower in countries operating under fixed exchange regime than those operating under floating peg. These results do not change substantially when changing the model (i.e. ordinary least squares with two-way fixed effects chosen by Hausman test and Arellano and Bond method or when including the multiplicative interaction terms) or when changing exchange classifications (i.e. de jure and de facto).

Suggested Citation

  • Jamal Bouoiyour & Refk Selmi, 2013. "The effects of central banks' independence on inflation outcomes in emerging countries: Does the choice of exchange regime matter?," Post-Print hal-01886584, HAL.
    • Handle: RePEc:hal:journl:hal-01886584
    Note: View the original document on HAL open archive server: https://hal.science/hal-01886584
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    References listed on IDEAS

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    Cited by:

    1. Bouoiyour, Jamal & Selmi, Refk, 2013. "Nonlinearities and the nexus between inflation and inflation uncertainty in Egypt: New evidence from wavelets transform framework," MPRA Paper 52414, University Library of Munich, Germany.
    2. Jamal Bouoiyour & Refk Selmi, 2014. "The Nexus between Inflation and Inflation Uncertainty via wavelet approach: Some Lessons from Egyptian case," Economics Bulletin, AccessEcon, vol. 34(4), pages 2093-2106.
    3. Stéphane Goutte & David Guerreiro & Bilel Sanhaji & Sophie Saglio & Julien Chevallier, 2019. "International Financial Markets," Post-Print halshs-02183053, HAL.

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