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The independence of central bank in view of Rogoff: The Turkish experience


  • Cem Mehmet Baydur
  • Bora Suslu
  • Selahattin Bekmez


According to Rogoff, economic variables may fluctuate due to changes in economic policies. In the long run, economic policies result in increases in fluctuations in inflation rate without increasing average outp level. From the perspective of Rogoff, problems regarding inflation instability can be overcame by giving the authority of making monetary policy to an independent institution. This study analyzes "legal independency" of the CBRT according to the theoretical framework developed by Rogoff. In addition, we tested independency of the CBRT by using Cukierman index, and concluded that independency of the CBRT has increased after a new law introduced in April 2001. Our econometric tests indicated that there is a negative relationship between inflation rate and independency of the CBRT. We could not find, however, any evidence to accept or reject the hypothesis of "an independent central bank results in a stable output level."

Suggested Citation

  • Cem Mehmet Baydur & Bora Suslu & Selahattin Bekmez, 2004. "The independence of central bank in view of Rogoff: The Turkish experience," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 143-143.
  • Handle: RePEc:ers:journl:v:vii:y:2004:i:1-2:p:143-

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    References listed on IDEAS

    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    2. McCallum, Bennett T, 1995. "Two Fallacies Concerning Central-Bank Independence," American Economic Review, American Economic Association, vol. 85(2), pages 207-211, May.
    3. Henriƫtte M. Prast, 1996. "Commitment Rather than Independence: An Institutional Design for Reducing the Inflationary Bias of Monetary Policy," Kyklos, Wiley Blackwell, vol. 49(3), pages 377-405, August.
    4. Alan S. Blinder, 2000. "Central-Bank Credibility: Why Do We Care? How Do We Build It?," American Economic Review, American Economic Association, vol. 90(5), pages 1421-1431, December.
    5. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834.
    6. Schultz, Christian, 1996. "Announcements and Credibility of Monetary Policy," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 673-680, October.
    7. Patricia S. Pollard, 1993. "Central bank independence and economic performance," Review, Federal Reserve Bank of St. Louis, issue jul, pages 21-36.
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    More about this item


    Independency of Central Bank; Monetary Policy; Time Inconstancy;

    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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