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The Effect of the Central Bank Independence on Economic Stability (in Persian)

Author

Listed:
  • Rahmani, Teymour

    (Iran)

  • Sadeghzadeh, Mohammad Amir

    (Iran)

Abstract

There have been many studies on the effect of the central bank independence and monetary policy on inflation¡ implying that more independent central banks are more successful in taming inflation. The same theoretical background could be applied to examine the effect of central bank independence on the real sector of the economy. We examine the relationship between the central bank independence and the stability of economic growth by using LVAW index for 43 countries over 1989-2000. Our empirical results show a negative relationship between the central bank independence and deviations of economic growth. Therefore¡ more independent central banks provide better economic environment for stable economic growth. JEL Classification: E58, E52, E32

Suggested Citation

  • Rahmani, Teymour & Sadeghzadeh, Mohammad Amir, 2011. "The Effect of the Central Bank Independence on Economic Stability (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 2(6), pages 213-234, March.
    • Handle: RePEc:mbr:jmbres:v:2:y:2011:i:6:p:213-234
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    More about this item

    Keywords

    Monetary Policy; Central Bank Independence; Monetary Cycle; Economic Stability;
    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
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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