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Central Bank Independence and Output Variability

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  • Crosby, M.

Abstract

The paper is structured as following in section a simple theoretical model is outlined, and it is found that an independent central bank should reduce (or eliminate) the inflation bias, but should increase output variability. in the following section empirical evidence consistent with the ida that countries which have smaller real shocks are more likely to choose an independent central bank is presented. The conclusion offers comments and suggestions fro further research.

Suggested Citation

  • Crosby, M., 1996. "Central Bank Independence and Output Variability," Papers 96/20, New South Wales - School of Economics.
    • Handle: RePEc:fth:nesowa:96/20
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    References listed on IDEAS

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    8. Adam S. Posen, 1995. "Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 253-274, National Bureau of Economic Research, Inc.
    9. Alesina, Alberto, 1988. "Alternative monetary regimes : A review essay," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 175-183, January.
    10. Crosby, Mark, 1998. "Central bank independence and output variability," Economics Letters, Elsevier, vol. 60(1), pages 67-75, July.
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    Cited by:

    1. Mr. Bernard J Laurens & Mr. Marco Arnone & Jean-François Segalotto, 2006. "The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence," IMF Working Papers 2006/227, International Monetary Fund.
    2. Crosby, Mark, 1998. "Central bank independence and output variability," Economics Letters, Elsevier, vol. 60(1), pages 67-75, July.
    3. Athina Zervoyianni & Athanasios Anastasiou & Andreas Anastasiou, 2014. "Does central bank independence really matter? Re-assessing the role of the independence of monetary policy-makers in macroeconomic outcomes," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 8(4), pages 427-473.
    4. Tomislav Ćorić & Dajana Cvrlje, 2009. "Central bank independence: The case of Croatia," EFZG Working Papers Series 0909, Faculty of Economics and Business, University of Zagreb.
    5. Marco Arnone & Bernard J Laurens & Jean-François Segalotto & Martin Sommer, 2009. "Central Bank Autonomy: Lessons from Global Trends," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 263-296, June.
    6. Perera, Anil & Ralston, Deborah & Wickramanayake, Jayasinghe, 2013. "Central bank financial strength and inflation: Is there a robust link?," Journal of Financial Stability, Elsevier, vol. 9(3), pages 399-414.
    7. Demertzis, Maria, 2004. "Central Bank independence: Low inflation at no cost? A numerical simulations exercise," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 661-677, December.

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    More about this item

    Keywords

    CENTRAL BANKS; INFLATION;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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