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The independence of central bank in view of Rogoff: The Turkish experience

Author

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  • Cem Mehmet Baydur
  • Bora Suslu
  • Selahattin Bekmez

Abstract

According to Rogoff, economic variables may fluctuate due to changes in economic policies. In the long run, economic policies result in increases in fluctuations in inflation rate without increasing average outp level. From the perspective of Rogoff, problems regarding inflation instability can be overcame by giving the authority of making monetary policy to an independent institution. This study analyzes "legal independency" of the CBRT according to the theoretical framework developed by Rogoff. In addition, we tested independency of the CBRT by using Cukierman index, and concluded that independency of the CBRT has increased after a new law introduced in April 2001. Our econometric tests indicated that there is a negative relationship between inflation rate and independency of the CBRT. We could not find, however, any evidence to accept or reject the hypothesis of "an independent central bank results in a stable output level."

Suggested Citation

  • Cem Mehmet Baydur & Bora Suslu & Selahattin Bekmez, 2004. "The independence of central bank in view of Rogoff: The Turkish experience," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 143-143.
    • Handle: RePEc:ers:journl:v:vii:y:2004:i:1-2:p:143-
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    References listed on IDEAS

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    5. Alesina, Alberto & Gatti, Roberta, 1995. "Independent Central Banks: Low Inflation at No Cost?," American Economic Review, American Economic Association, vol. 85(2), pages 196-200, May.
    6. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, April.
    7. Schultz, Christian, 1996. "Announcements and Credibility of Monetary Policy," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 673-680, October.
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    More about this item

    Keywords

    Independency of Central Bank; Monetary Policy; Time Inconstancy;
    All these keywords.

    JEL classification:

    • 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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