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Legal Central Bank independence and inflation in Latin America during the 1990s

Author

Listed:
  • Luis I. Jacome H.

    (Fondo Monetario Internacional)

Abstract

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. Disaggregating 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.

Suggested Citation

  • Luis I. Jacome H., 2002. "Legal Central Bank independence and inflation in Latin America during the 1990s," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 5(1), pages 157-194, June.
  • Handle: RePEc:blv:journl:v:5:y:2002:i:1:p:157-194
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    Cited by:

    1. 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.
    2. 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.
    3. Mauricio Nunes & Sergio Da Silva, 2008. "Foreign exchange intervention and central bank independence: the Latin American experience," Applied Financial Economics Letters, Taylor and Francis Journals, vol. 4(5), pages 379-382.

    More about this item

    Keywords

    central bank independence; inflation; Latin American countries;

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other

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