Monetary Commitment, Institutional Constraints and Inflation: Empirical Evidence for OECD Countries Since the 1970s
28 Pages Posted: 12 Jun 2007
Date Written: May 2007
Abstract
Central bank independence (CBI) is a very important precondition for price stability. However, the empirical evidence for a correlation between both is relatively weak. In this paper, this weakness is countered with a) an extended measure of monetary commitment, which includes well-known criteria for CBI and external criteria such as convertibility and exchange rate regimes and b) the argument that monetary commitment can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment with data from four decades confirms the crucial role of monetary commitment for price stability.
Keywords: central bank independence, price stability, monetary commitment
JEL Classification: E50
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Central Bank Independence: An Update of Theory and Evidence
By Helge Berger, Jakob De Haan, ...
-
Why Does Inflation Differ Across Countries?
By Marta Campillo and Jeffrey A. Miron
-
Central Bank Credibility: Why Do We Care? How Do We Build it?
-
Central Bank Independence and Disinflationary Credibility: A Missing Link?
-
Central Bank Autonomy: Lessons from Global Trends
By Marco Arnone, Bernard Laurens, ...
-
By Luis I Jácome and Francisco Vázquez
-
Central Bank Independence and Monetary Policymaking Institutions - Past Present and Future
-
By Tonny Lybek
-
The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence
By Marco Arnone, Bernard Laurens, ...