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Inflation, Central Bank Independence and the Legal System Author info | Abstract | Publisher info | Download info | Related research | Statistics Bernd Hayo ()
Stefan Voigt ()
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We argue that a higher degree of de facto independence of the legal system from the other government branches as well as public trust in the legal system may reduce the average inflation record of countries through a direct and an indirect channel. The direct channel works by affecting potential output, while the indirect channel helps to increase the de facto independence of the central bank. In the empirical section of the paper, we present evidence in favor of both channels in a sample containing both industrial and Third World countries. A model that contains legal trust in addition to de jure central bank independence, checks and balances within government, and openness can explain 60% of the variation in the logarithm of the inflation rate.
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Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number
02-2005.
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Length: 29 pages
Date of creation: Jan 2005Date of revision:
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Keywords: Judicial Independence ; Legal Trust ; Central Bank Independence ; Inflation ; Other versions of this item:
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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References listed on IDEAS 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.: Bernd Hayo & Stefan Voigt, 2003.
"Explaining de facto judicial independence ,"
Discussion Papers in Economics
46/03, University of Kassel, Institute of Economics.
[Downloadable!]
Other versions:
Bernd Hayo & Stefan Voigt, 2003.
"Explaining de facto judicial independence ,"
Law and Economics
0306001, EconWPA.
[Downloadable!] Bernd Hayo and Stefan Voigt, 2005.
"Explaining de facto Judicial Independence ,"
Marburg Working Papers on Economics
200507, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
[Downloadable!] Bernd Hayo & Stefan Voigt, 2003.
"Explaining de facto judicial independence ,"
ICER Working Papers
01-2004, ICER - International Centre for Economic Research.
[Downloadable!] Hayo, Bernd & Voigt, Stefan, 2007.
"Explaining de facto judicial independence ,"
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Cukierman, Alex & Webb, Steven B, 1995.
"Political Influence on the Central Bank: International Evidence ,"
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Other versions: Lars Feld & Stefan Voigt, 2003.
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CESifo Working Paper Series
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European Journal of Political Economy ,
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Bernd Hayo & Carsten Hefeker, 2001.
"Do We Really Need Central Bank Independence? A Critical Re- examination ,"
Macroeconomics
0103006, EconWPA.
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Moser, Peter, 1999.
"Checks and balances, and the supply of central bank independence ,"
European Economic Review ,
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Sergio Clavijo, .
"Central Banking and Macroeconomic Coordination: The Case of Colombia ,"
Borradores de Economia
159, Banco de la Republica de Colombia.
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Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992.
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World Bank Economic Review ,
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Econometrica ,
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Other versions: Kydland, Finn E & Prescott, Edward C, 1977.
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Journal of Political Economy ,
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Sergio Clavijo, 2000.
"Central Banking and Macroeconomic Coordination: The Case of Colombia ,"
BORRADORES DE ECONOMIA
002113, BANCO DE LA REPÚBLICA.
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Philip Keefer, 2001.
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Working Papers Central Bank of Chile
119, Central Bank of Chile.
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Berger, Helge & de Haan, Jakob & Eijffinger, Sylvester C W, 2001.
" Central Bank Independence: An Update of Theory and Evidence ,"
Journal of Economic Surveys ,
Blackwell Publishing, vol. 15(1), pages 3-40, February.
[Downloadable!] (restricted)
Other versions:
Berger, Helge & Haan, Jakob de & Eijffinger, Sylvester C.W, 2000.
"Central Bank Independence: An Update of Theory and Evidence ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
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"Central Bank Independence: An Update of Theory and Evidence ,"
CEPR Discussion Papers
2353, C.E.P.R. Discussion Papers.
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