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Central Bank Independence and Price Stability: Evidence from 23 OECD-countries

Author

Listed:
  • Daunfeldt, Sven-Olov

    (The Swedish Research Institute of Trade (HUI))

  • de Luna, Xavier

    (Department of Statistics)

Abstract

In this paper, we use a non-parametric regression method to compare the transition process from high to low inflation with the implementation dates of central bank independence reforms. In a majority of the countries, price stability is achieved before more independence is given to the central bank. This suggests that the credibility of a low inflation goal can be achieved without institutional reforms which grant the central bank more independence from the political policymakers.

Suggested Citation

  • Daunfeldt, Sven-Olov & de Luna, Xavier, 2002. "Central Bank Independence and Price Stability: Evidence from 23 OECD-countries," Umeå Economic Studies 589, Umeå University, Department of Economics, revised 12 Jun 2003.
    • Handle: RePEc:hhs:umnees:0589
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    References listed on IDEAS

    as
    1. Sven-Olov Daunfeldt & Xavier De Luna, 2001. "The efficacy and cost of regime shifts in inflation policies-Evidence from New Zealand and Sweden," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 217-224.
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    11. Posen, Adam, 1998. "Central Bank Independence and Disinflationary Credibility: A Missing Link?," Oxford Economic Papers, Oxford University Press, vol. 50(3), pages 335-359, July.
    12. Hayo, Bernd, 1998. "Inflation culture, central bank independence and price stability," European Journal of Political Economy, Elsevier, vol. 14(2), pages 241-263, May.
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    Cited by:

    1. Adolfo Meisel & Juan D. Barón, 2010. "Un análisis histórico de la independencia de la banca central en América Latina: la experiencia colombiana, 1923-2008," Cuadernos de Historia Económica 6406, Banco de la República, Economía Regional.
    2. Alesina, Alberto Francesco, 2008. "Comments on "When Do Policy Reforms Work?' by Daron Acemoglu et al," Scholarly Articles 12553722, Harvard University Department of Economics.
    3. Meisel, Adolfo & Barón, Juan D., 2010. "A historical analysis of central bank independence in Latin America: the Colombian experience, 1923-2008," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(1), pages 83-102, March.
    4. Jorg Bibow, 2010. "A Post Keynesian Perspective on the Rise of Central Bank Independence: A Dubious Success Story in Monetary Economics," Economics Working Paper Archive wp_625, Levy Economics Institute.
    5. Berggren, Niclas & Daunfeldt, Sven-Olov & Hellström, Jörgen, 2014. "Social trust and central-bank independence," European Journal of Political Economy, Elsevier, vol. 34(C), pages 425-439.
    6. Sven-Olov Daunfeldt & Jörgen Hellström & Mats Landström, 2013. "Why Do Politicians Implement Central Bank Independence Reforms?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 41(4), pages 427-438, December.
    7. Ourania Dimakou, 2010. "Central Bank Independence, Bureaucratic Corruption and Fiscal Responses - Empirical Evidence," Birkbeck Working Papers in Economics and Finance 1012, Birkbeck, Department of Economics, Mathematics & Statistics.
    8. Erixon, Lennart, 2011. "Under the influence of traumatic events, new ideas, economic experts and the ICT revolution - the economic policy and macroeconomic performance of Sweden in the 1990s and 2000s," Research Papers in Economics 2011:25, Stockholm University, Department of Economics.
    9. Ms. JoAnne Morris & Mr. Tonny Lybek, 2004. "Central Bank Governance: A Survey of Boards and Management," IMF Working Papers 2004/226, International Monetary Fund.

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    More about this item

    Keywords

    Central bank reform; inflation targeting; monetary policy; non-parametric decomposition;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • 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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