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Informal central bank independence: an analysis for three European countries

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Abstract

Changes in formal and informal central bank independence (CBI) in France, Italy and the UK in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks, defined as the ability to pursue price stability regardless of the government’s preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the central bank, the existence of antiinflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the central bank. These broad trends help to explain some of the inflation experience of the 1980s and 1990s which cannot be understood in terms of changes to formal CBI.

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  • David Cobham & Stefania Cosci & Fabrizio Mattesini, 2008. "Informal central bank independence: an analysis for three European countries," CEIS Research Paper 116, Tor Vergata University, CEIS, revised 14 Jul 2008.
  • Handle: RePEc:rtv:ceisrp:116
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    1. Cukierman, Alex, 2008. "Central bank independence and monetary policymaking institutions -- Past, present and future," European Journal of Political Economy, Elsevier, vol. 24(4), pages 722-736, December.
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    9. Clive Briault & Andrew Haldane & Mervyn A. King, 1997. "Independence and Accountability," Palgrave Macmillan Books, in: Iwao Kuroda (ed.), Towards More Effective Monetary Policy, chapter 10, pages 299-340, Palgrave Macmillan.
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    Cited by:

    1. David Cobham, 2012. "The past, present, and future of central banking," Oxford Review of Economic Policy, Oxford University Press, vol. 28(4), pages 729-749, WINTER.
    2. David, Cobham, 2013. "Monetary policy under the Labour government 1997- 2010: the first 13 years of the MPC," SIRE Discussion Papers 2013-23, Scottish Institute for Research in Economics (SIRE).
    3. D. Masciandaro, 2019. "What Bird Is That? Central Banking And Monetary Policy In The Last Forty Years," BAFFI CAREFIN Working Papers 19127, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    4. David Cobham, 2013. "Monetary policy under the Labour government: the first 13 years of the MPC," Oxford Review of Economic Policy, Oxford University Press, vol. 29(1), pages 47-70, SPRING.
    5. Forrest Capie & Geoffrey Wood, 2013. "Central Bank Independence: A Victim of the Crisis?," Economic Affairs, Wiley Blackwell, vol. 33(3), pages 379-385, October.
    6. King Banaian, 2008. "Measuring Central Bank Independence: Ordering, Ranking, or Scoring?," Palgrave Macmillan Books, in: King Banaian & Bryan Roberts (ed.), The Design and Use of Political Economy Indicators, chapter 0, pages 33-55, Palgrave Macmillan.
    7. Cobham, David, 2015. "Multiple Objectives in Monetary Policy: A de Facto Analysis for ‘Advanced’ Countries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-63, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. David Cobham, 2015. "Multiple Objectives in Monetary Policy: A De Facto Analysis for ‘Advanced’ Countries," Manchester School, University of Manchester, vol. 83, pages 83-106, September.
    9. repec:ags:aaea07:383 is not listed on IDEAS
    10. Poomjai Nacaskul & Kritchaya Janjaroen & Suparit Suwanik, 2012. "Economic Rationales for Central Banking: Historical Evolution, Policy Space, Institutional Integrity, and Paradigm Challenges," Working Papers 2012-04, Monetary Policy Group, Bank of Thailand.

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    More about this item

    Keywords

    Monetary policy; central bank independence; inflation;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • 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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