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Monetary institutions and inflation performance: cross-country evidence

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  • Bilin Neyapti

Abstract

This paper presents an empirical investigation of the effectiveness of the institutional frameworks of monetary policy in achieving and maintaining price stability. The institutional frameworks considered are central bank independence (CBI), inflation targeting (IT), currency boards (CB) and monetary unions (MU). Against the vast literature that argues for the price stabilizing effects of each of these institutions, the empirical evidence presented here suggests that countries that have adopted the IT and CB regimes have, on average, been associated with lower inflation rates than others during the past decade. This finding is robust to various control variables, while governance appears to be a substitute to formal mechanisms.

Suggested Citation

  • Bilin Neyapti, 2012. "Monetary institutions and inflation performance: cross-country evidence," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(4), pages 339-354, December.
  • Handle: RePEc:taf:jpolrf:v:15:y:2012:i:4:p:339-354 DOI: 10.1080/17487870.2012.731805
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    Cited by:

    1. Bilin Neyapti, 2016. "From Monetary Policy to Macroprudentials: the Aftermath of the Great Recession," BAFFI CAREFIN Working Papers 1629, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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