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To What Extent Does Central Bank Independence Alleviate Poverty in Developing Countries?

Author

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  • Ayoub Rabhi

    (Center for Global Studies, International University of Rabat, Rabat, Morroco)

Abstract

This paper investigates the nexus between poverty and central bank independence in developing countries. The study examines data from up to 35 developing countries from 2000 to 2018. Using the GMM dynamic panel data method, the study finds that de jure central bank independence is more robust than de facto in reducing inflation. However, the effect of de facto central bank independence is significant in reducing poverty, while de jure central bank independence is not. The paper concludes that central bank independence may play a role in managing inflation in developing countries with high inflation and could relatively contribute to poverty reduction in these countries.

Suggested Citation

  • Ayoub Rabhi, 2024. "To What Extent Does Central Bank Independence Alleviate Poverty in Developing Countries?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 13(3), pages 167-189.
    • Handle: RePEc:cbk:journl:v:13:y:2024:i:3:p:167-189
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    More about this item

    Keywords

    Central Bank Independence; Monetary Policy; Inflation; Poverty; Developing countries.;
    All these keywords.

    JEL classification:

    • 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
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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