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The Development of Central Bank Independence: Empirical Evidence

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  • Andreas Höfer
  • Katrin Jaenke

Abstract

In the academic literature there are different indices to quantify the independence of Central Banks. The main indices to measure Central Bank Independence (CBI) were published between 1970 and 1990. This paper applies CBI indices to a sample of 15 industrial countries and the European Central Bank (ECB) to the current legal conditions. Hence, we are able to study the development of CBI and how it is related with change of inflation. Overall, we find that CBI has increased over the last decades. However, the original approaches to determine CBI do not consider the unconventional monetary policy (Quantitative Easing (QE)) that has been practised by Central Banks in recent years. Considering QE leads to lower CBI scores which are still higher than the original scores that were determined in the 1970’s–1990’s.

Suggested Citation

  • Andreas Höfer & Katrin Jaenke, 2023. "The Development of Central Bank Independence: Empirical Evidence," Credit and Capital Markets – Kredit und Kapital, Duncker & Humblot, Berlin, vol. 56(2), pages 123-144.
    • Handle: RePEc:dah:aeqccm:v56_y2023_i2_q2_p123-144
    DOI: 10.3790/ccm.56.2.123
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    More about this item

    Keywords

    Central Banking; Central Bank Independence; Measurement of Central Bank Independence;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • 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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