A Revisit of the Relation between Central Bank Independence and Inflation
AbstractConventional wisdom argues that the relation between central bank independence (CBI) and inflation is negative. However, empirical studies based upon regressing inflation rates on CBI tend to reject this hypothesis and show that there is no negative relationship. This article investigates the effect of CBI on inflation by quantile regression. The empirical result shows that the relation could be negative or positive for different quantiles of inflation. Quantile regression provides a method for investigating the relation completely between CBI and inflation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30398.
Date of creation: 15 Aug 2009
Date of revision:
Publication status: Published in The Empirical Economics Letters 2.9(2010): pp. 139-143
Central Bank Independence; Inflation; Quantile Regression.;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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