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Controlling inflation in transition economies: The relevance of central bank independence and the right nominal anchor

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  • Helmut Wagner

Abstract

Controlling inflation is a central problem in transition economies. This paper asks under what conditions or even whether central bank independence helps in this task. The conclusion shows that merely imposing legal independence on the central bank may be ineffective or even counterproductive. It is necessary to make a monetary strategy and the responsibilities and restrictions of central bank policy transparent to the public. In addition, it is important that the right nominal anchor is selected—one that is, or is believed to be, effective and sustainable. Both monetary targeting and inflation targeting are assumed to be unsuitable for most transition countries. Instead, some kind of dynamic exchange rate targeting appears to be the most reasonable choice. Copyright International Atlantic Economic Society 2000

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  • Helmut Wagner, 2000. "Controlling inflation in transition economies: The relevance of central bank independence and the right nominal anchor," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(1), pages 60-70, March.
    • Handle: RePEc:kap:atlecj:v:28:y:2000:i:1:p:60-70
    DOI: 10.1007/BF02300531
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    1. Alex Cukierman, 1998. "The Economics of Central Banking," International Economic Association Series, in: Holger C. Wolf (ed.), Contemporary Economic Issues, chapter 3, pages 37-82, Palgrave Macmillan.
    2. Eijffinger, Sylvester & van Rooij, Maarten & Schaling, Eric, 1996. "Central Bank Independence: A Paneldata Approach," Public Choice, Springer, vol. 89(1-2), pages 163-182, October.
    3. Paul R. Masson & Miguel A. Savastano & Sunil Sharma, 2019. "The Scope for Inflation Targeting in Developing Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 10, pages 331-383, World Scientific Publishing Co. Pte. Ltd..
    4. Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
    5. Pierre-Richard Agénor, 1993. "Credible Disinflation Programs," IMF Policy Discussion Papers 1993/009, International Monetary Fund.
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    Cited by:

    1. Helmut Wagner, 2002. "Implications of Globalization for Monetary Policy," SUERF Studies, SUERF - The European Money and Finance Forum, number 17 edited by Morten Balling, May.
    2. Mr. Helmut Wagner, 2001. "Implications of Globalization for Monetary Policy," IMF Working Papers 2001/184, International Monetary Fund.
    3. Helmut Wagner, 2005. "Globalization and financial instability: Challenges for exchange rate and monetary policy," International Journal of Social Economics, Emerald Group Publishing, vol. 32(7), pages 616-638, July.

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