Central Bank Independence in Transition Economies

Economics of Transition, Vol. 8, No. 3, November 2000

CASE Network Studies and Analyses No. 120

Posted: 6 Jun 2001

See all articles by Wojciech S. Maliszewski

Wojciech S. Maliszewski

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: 2000

Abstract

The paper discusses recent changes in central bank laws and the relationship between inflation and central bank independence in transition economies. Two indices of legal independence are constructed, covering political and economic aspects of independence. Most of the countries experienced high-inflation episodes in the recent past and changes introduced to the laws after, or simultaneously, with stabilization programmes strengthened the position of the central banks. In further analysis, an inverse relationship emerges between inflation and indices of central bank independence. However, the robust relationship is present only at a high level of economic liberalization. This conclusion is supported by results from regressions on time-aggregated and panel data, even after controlling for the government fiscal position and the absence/presence of an IMF stabilization package.

Keywords: central bank independence, transition economies

JEL Classification: E5, P2, K1, P16

Suggested Citation

Maliszewski, Wojciech S., Central Bank Independence in Transition Economies (2000). Economics of Transition, Vol. 8, No. 3, November 2000, CASE Network Studies and Analyses No. 120, Available at SSRN: https://ssrn.com/abstract=264815

Wojciech S. Maliszewski (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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