Are Central Bank Independence Reforms Necessary for Achieving Low and Stable Inflation
Year: 2013
Type: preprint
Abstract: Using data on the occurence of central bank independence (CBI) reforms in 131 countries during 1980-2005, we test whether they were important in reducing inflation and maintaining price stability. CBI reforms are found to have reduced inflation on average 3.31% when countries with historically high inflation rates are included. But countries with lower inflation have reduced it without institutional reforms granting central banks more independence, undermining the theoretical time-inconsistency case for CBI. There is furthermore no evidence that CBI reforms have helped reduce inflation variability.
Authors: Sven‐Olov Daunfeldt, Mats Landström, Niklas Rudholm
Institution: Dalarna University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2145869091