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Central Bank Credibility, Independence, and Monetary Policy

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  • Abdelkader Aguir

    () (Lorraine University, BETA Lab UMR 7522 University of Lorraine and UR MOFID UR 13-ES60, Metz, France)

Abstract

The main motives behind the adoption of an inflation targeting regime largely relate to the notion of credibility, transparency of monetary policy and the autonomy of the central bank, which explicitly undertakes to achieve a certain inflation target. This paper examines the effects of inflation targeting in emerging economies in relation to the degree of independence of the central bank and the credibility of monetary policy. We find effects in emerging economies with little central bank independence, so our findings suggest that the central bank’s credibility, transparency and independence is a prerequisite for emerging economies to experience a decline in inflation following the adoption of inflation targeting.

Suggested Citation

  • Abdelkader Aguir, 2018. "Central Bank Credibility, Independence, and Monetary Policy," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 7(3), pages 91-110.
  • Handle: RePEc:cbk:journl:v:7:y:2018:i:3:p:91-110
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    References listed on IDEAS

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    More about this item

    Keywords

    Credibility; transparency; central bank independence; inflation targeting;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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