Discussion on the Inconsistency of Central Bank Independence Measures
AbstractIn recent years, a number of countries have modified their monetary institutions, focusing, in many cases, on increasing of the independence of national central banks. This attracted attention of academics and policymakers, who have shown continuing interest in various monetary institutions with respect to the formulation of monetary policy. This paper analyzes some of them. Especially, it reviews and criticizes generally accepted indices of central bank independence. The analysis names several imprecisions among measures that cover the subjectivity, criteria and weighting problem. It brings the conclusion that neither of measures, whether it is the widely accepted Cukierman index (1992) or work based on Grilli, Masciandaro and Tabellini (1991), are not free of criticism. Additional problem appears when countries with different levels of development are concerned. Here, the Borda Count method is used among ten transition economies to determine the country with the most independent central bank, based on four different measures. With the wide criticism of indices, this work questions the robustness and representation of empirical studies and their results.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Aboa Centre for Economics in its series Discussion Papers with number 21.
Date of creation: Sep 2007
Date of revision:
institution; central bank independence;
Find related papers by JEL classification:
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
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.:
- Loungani, Prakash & Sheets, Nathan, 1997.
"Central Bank Independence, Inflation, and Growth in Transition Economies,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 29(3), pages 381-99, August.
- Prakash Loungani & Nathan Sheets, 1995. "Central bank independence, inflation and growth in transition economies," International Finance Discussion Papers 519, Board of Governors of the Federal Reserve System (U.S.).
- Brumm, Harold J, 2000. "Inflation and Central Bank Independence: Conventional Wisdom Redux," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 807-19, November.
- Eijffinger, S-C-W & de Haan, J, 1996.
"The Political Economy of Central-Bank Independence,"
Princeton Studies in International Economics
19, International Economics Section, Departement of Economics Princeton University,.
- Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
- Banaian, King & Burdekin, Richard C K & Willett, Thomas D, 1998. " Reconsidering the Principal Components of Central Bank Independence: The More the Merrier?," Public Choice, Springer, vol. 97(1-2), pages 1-12, October.
- Mangano, Gabriel, 1998. "Measuring Central Bank Independence: A Tale of Subjectivity and of Its Consequences," Oxford Economic Papers, Oxford University Press, vol. 50(3), pages 468-92, July.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000.
"Central Bank Rerform, Liberalization and Inflation in Transition Economies - an International Perspective,"
00-19, Tel Aviv.
- Cukierman, Alex & Miller, Geoffrey P. & Neyapti, Bilin, 2002. "Central bank reform, liberalization and inflation in transition economies--an international perspective," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 237-264, March.
- Cukierman, Alex & Miller, Geoffrey & Neyapti, Bilin, 2001. "Central Bank Reform, Liberalization and Inflation in Transition Economies - An International Perspective," CEPR Discussion Papers 2808, C.E.P.R. Discussion Papers.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000. "Central Bank Rerform, Liberalization and Inflation in Transition Economies - an International Perspective," Papers 2000-19, Tel Aviv.
- Cukierman, A. & Miller, G.P. & Neyapti, B., 2000. "Central Bank Reform, Liberalization and Inflation in Transition Economies: An International Perspective," Discussion Paper 2000-106, Tilburg University, Center for Economic Research.
- Guy Debelle & Stanley Fischer, 1994.
"How independent should a central bank be?,"
Working Papers in Applied Economic Theory
94-05, Federal Reserve Bank of San Francisco.
- Banaian, King & Luksetich, William A, 2001. "Central Bank Independence, Economic Freedom, and Inflation Rates," Economic Inquiry, Western Economic Association International, vol. 39(1), pages 149-61, January.
- Eijffinger, S.C.W. & Stadhouders, P., 2003.
"Monetary policy and the rule of law,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-152960, Tilburg University.
- Forder, J., 2000.
"Traps in the Measurement of Independence and Accountability of Central Banks,"
Economics Series Working Papers
9923, University of Oxford, Department of Economics.
- James Forder, 2000. "Traps in the Measurement of Independence and Accountability of Central Banks," Economics Series Working Papers 23, University of Oxford, Department of Economics.
- Guy Debelle, 1996. "Central Bank Independence: A Free Lunch?," IMF Working Papers 96/1, International Monetary Fund.
- Mervyn King, 2004. "The Institutions of Monetary Policy," American Economic Review, American Economic Association, vol. 94(2), pages 1-13, May.
- Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
- Wojciech S. Maliszewski, 2000. "Central Bank Independence in Transition Economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 749-789, November.
- Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March.
- Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
- Havrilesky, Thomas & Granato, James, 1993. " Determinants of Inflationary Performance: Corporatist Structures vs. Central Bank Autonomy," Public Choice, Springer, vol. 76(3), pages 249-61, July.
- Christopher J. Waller, 1995. "Performance contracts for central bankers," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 3-14.
- Andreas Freytag & Donato Masciandaro, 2005. "Financial Supervision Fragmentation and Central Bank Independence: The Two Sides of the Same Coin?," Jenaer Schriften zur Wirtschaftswissenschaft 14/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
- Stanley Fischer, 1995. "The Unending Search for Monetary Salvation," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 275-298 National Bureau of Economic Research, Inc.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Eijffinger, S.C.W., 1993. "Central bank independence in twelve industrial countries," Open Access publications from Tilburg University urn:nbn:nl:ui:12-152908, Tilburg University.
- Mervyn King, 2004. "The Institutions of Monetary Policy," NBER Working Papers 10400, National Bureau of Economic Research, Inc.
- Dalla Pellegrina, L. & Masciandaro, D. & Pansini, R.V., 2013. "The central banker as prudential supervisor: Does independence matter?," Journal of Financial Stability, Elsevier, vol. 9(3), pages 415-427.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Aleksandra Maslowska).
If references are entirely missing, you can add them using this form.