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Does an Independent Central Bank Smooth Exchange Rate Volatility? Evidence from Time-Varying Panel Causality Analysis

Year: 2024

Type: article

Abstract: This paper empirically examines the effect of the central banks independence on exchange rate volatility by using a large data-set for the E7 (7 emerging countries) covering the period 1998-2017. This paper applies the time-varying panel causality analysis to obtain country-based results. The results show that the policy design, with relatively independent central banks, provides supportive results for macroeconomic stability. It is concluded that policies focusing on current problems by ignoring macroeconomic stability, such as the 2008 crisis, have eliminated the relationship between bank independence and stability.

Source: Journal of Central Banking Theory and Practice

DOI: 10.2478/jcbtp-2024-0028

Authors: Durmuş Çağrı Yıldırım, Ömer Esen, Uğur Çınar

Institution: Tekirdağ Namık Kemal University

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: diamond

OpenAlex ID: W4402639467

FWCI: 0.677

Cites: 88

Cited by: 1

Related to: 10