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Legal Central Bank Independence and Inflation in Latin America During the 1990's


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  • Luis Ignacio Jácome


This paper reviews central banks’ legal reform in Latin America during the 1990s and discusses the status of central bank independence in the region. Based on this information, it builds a simplified index of central bank independence which, in addition to the commonly used criteria of political and economic independence, incorporates provisions of central banks’ financial autonomy, accountability, and lender-of-last-resort. The paper finds a moderate negative correlation between increased central bank independence and inflation during 1999–2001 in 14 Latin American countries. Dissagregating the index, the same analysis suggests that economic independence is the key component driving the observed negative correlation between legal central bank independence and inflation.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/212.

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Length: 41
Date of creation: 01 Dec 2001
Date of revision:
Handle: RePEc:imf:imfwpa:01/212

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Postal: International Monetary Fund, Washington, DC USA
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Keywords: Monetary policy; central bank; inflation; central banks; monetary fund; monetary instruments; external payments; open market operations; reserve requirements; domestic currency; currency board; reserve bank; monetary stability; monetary phenomenon; private bank; public debt; monetary institutions; monetary economics; intermediate monetary target; public finances; monetary transparency; monetary growth; monetary program; debt service; central bank reserve requirements; monetary policy regimes; monetary policies; monetary target; monetary stabilization; money supply; monetary discipline; monetary expansion; private banks; domestic debts; monetary disturbances; government securities;

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Cited by:
  1. Ourania Dimakou, 2010. "Central Bank Independence, Bureaucratic Corruption and Fiscal Responses - Empirical Evidence," Birkbeck Working Papers in Economics and Finance 1012, Birkbeck, Department of Economics, Mathematics & Statistics.
  2. Noha Farrag & Ahmed Kamaly, 2007. "Measuring the Degree of Central Bank Independence in Egypt," Working Papers 4, The German University in Cairo, Faculty of Management Technology.


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