Inflation and Central Bank Independence: A Meta Regression Analysis

26 Pages Posted: 21 Mar 2008

See all articles by Jakob de Haan

Jakob de Haan

University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute); De Nederlandsche Bank

Jeroen Klomp

University of Groningen

Date Written: March 21, 2008

Abstract

Using 59 studies, we perform a meta regression analysis of studies examining the relationship between inflation and central bank independence (CBI). There is a negative and significant relation between inflation and CBI in OECD countries, although the results are sensitive to the indicator used and the estimation period chosen. Studies based on simple bivariate regressions suffer from an omitted variable bias, but our results suggest that only an interaction variable of labor market characteristics and CBI reduces the significance of the CBI indicator. We find no significant differences between studies based on a cross-country or panel settings. Interestingly, over time the reported impact of CBI on inflation in journal articles increases.

Keywords: central bank independence, inflation, meta analysis

JEL Classification: E52, E58

Suggested Citation

de Haan, Jakob and Klomp, Jeroen, Inflation and Central Bank Independence: A Meta Regression Analysis (March 21, 2008). Paolo Baffi Centre Research Paper No. 2008-03, Available at SSRN: https://ssrn.com/abstract=1112023 or http://dx.doi.org/10.2139/ssrn.1112023

Jakob De Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

Jeroen Klomp (Contact Author)

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

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