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Estimating the Impact of Central Bank Independence upon Macroeconomic Performance using a Panel Data Model

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  • Dumiter, Florin Cornel

    () (”Vasile Goldis” Western University of Arad, Faculty of Economic Sciences)

Abstract

This paper analyzes a new index for measuring central bank independence and inflation targeting in order to evaluate and assess the impact of central bank’s independence level upon the macroeconomic performance. The new index for measuring central bank independence and inflation targeting has three main pillars: central bank political and legal independence, central bank governance and conduct of monetary policy and central bank transparency and accountability. Moreover, the paper intends to evaluate the impact of central bank independence based on the new index upon some macroeconomic indicators, such as the inflation rate, the output, the unemployment rate, the budgetary deficit and the current account deficit.

Suggested Citation

  • Dumiter, Florin Cornel, 2011. "Estimating the Impact of Central Bank Independence upon Macroeconomic Performance using a Panel Data Model," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 106-128, December.
  • Handle: RePEc:rjr:romjef:v::y:2011:i:4:p:106-128
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    References listed on IDEAS

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    1. repec:dgr:rugccs:200101 is not listed on IDEAS
    2. Cukierman, Alex & Webb, Steven B, 1995. "Political Influence on the Central Bank: International Evidence," World Bank Economic Review, World Bank Group, vol. 9(3), pages 397-423, September.
    3. Charles T Carlstrom & Timothy S Fuerst, 2009. "Central Bank Independence And Inflation: A Note," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 182-186, January.
    4. 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 353-398, September.
    5. Alberto Alesina, 1988. "Macroeconomics and Politics," NBER Chapters,in: NBER Macroeconomics Annual 1988, Volume 3, pages 13-62 National Bureau of Economic Research, Inc.
    6. Jan-Egbert Sturm & Jakob de Haan, 2001. "Inflation in Developing Countries: Does Central Bank Independence Matter?," CESifo Working Paper Series 511, CESifo Group Munich.
    7. Etienne Farvaque & Jerome Hericourt & Gaël Lagadec, 2010. "Central bank independence and ageing," Applied Economics Letters, Taylor & Francis Journals, vol. 17(12), pages 1167-1171.
    8. Marco Arnone & Bernard J Laurens & Jean-François Segalotto & Martin Sommer, 2009. "Central Bank Autonomy: Lessons from Global Trends," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 263-296, June.
    9. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    10. Jean-François Segalotto & Marco Arnone & Bernard J Laurens, 2006. "Measures of Central Bank Autonomy; Empirical Evidence for OECD, Developing, and Emerging Market Economies," IMF Working Papers 06/228, International Monetary Fund.
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    Citations

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    Cited by:

    1. Athina Zervoyianni & Athanasios Anastasiou & Andreas Anastasiou, 2014. "Does central bank independence really matter? Re-assessing the role of the independence of monetary policy-makers in macroeconomic outcomes," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 8(4), pages 427-473.
    2. Ichiro Iwasaki & Akira Uegaki, 2017. "Central Bank Independence and Inflation in Transition Economies: A Comparative Meta-Analysis with Developed and Developing Economies," Eastern European Economics, Taylor & Francis Journals, vol. 55(3), pages 197-235, May.

    More about this item

    Keywords

    index of central bank independence and inflation targeting; central bank governance; central bank transparency and accountability; political and legal central bank independence; inflation rates; panel data;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • 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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