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Central Bank Independence - Economic and Political Dimensions

Author

Listed:
  • Ottmar Issing

    (University of York, UK)

Abstract

This article reviews the empirical evidence and theoretical arguments for central bank independence, including political economy considerations. It concludes that the optimal institutional framework to keep inflation lastingly under control is based on granting independence to central banks and establishing price stability as the overriding objective of monetary policy. This framework - combined with appropriate appointment procedures, a sound governance structure and a welldefined monetary policy strategy of the central bank - would ensure price stability. Finally, public support for central bank independence also matters. In this respect, the central bank has a special role in nurturing a stability-oriented culture in society.

Suggested Citation

  • Ottmar Issing, 2006. "Central Bank Independence - Economic and Political Dimensions," National Institute Economic Review, National Institute of Economic and Social Research, vol. 196(1), pages 66-76, April.
    • Handle: RePEc:sae:niesru:v:196:y:2006:i:1:p:66-76
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    Citations

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    Cited by:

    1. Michael Patrick Curran & Matthew J. Fagerstrom, 2019. "Monetary Growth and Financial Sector Wages," Villanova School of Business Department of Economics and Statistics Working Paper Series 41, Villanova School of Business Department of Economics and Statistics.
    2. Pablo Duarte & Gunther Schnabl, 2019. "Monetary policy, inequality and political instability," The World Economy, Wiley Blackwell, vol. 42(2), pages 614-634, February.
    3. Peter Howells, 2009. "Independent Central Banks: Some theoretical and empirical problems?," Working Papers 0908, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.

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