Quest for the Best: How to Measure Central Bank Independence and Show its Relationship with Inflation

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Title:Quest for the Best: How to Measure Central Bank Independence and Show its Relationship with Inflation
Creators:
Maslowska, Aleksandra A.
Journal or Publication Title:
AUCO Czech Economic Review, 5, 2, pp. 132-161
Uncontrolled Keywords:Central bank independence, political autonomy, economic autonomy, institution, estimation

Abstract

The objective of this paper is to check measures for explanatory power of central bank independence (CBI) in a series of econometric tests. Measures of central bank autonomy offer a useful expression of the extent to which a central bank is able to keep the government away from influencing a change in the inflation rate. The more a measure represents this idea, the easier one can find a relation between the CBI value and the inflation rate. Results of estimations show that proxies by Grilli et al. (1991) are strong regressors of inflation rate, contrary to those by Cukierman et al. (1992). Moreover, estimation results challenge the belief that divergences in CBI-inflation rate estimations are due to differences in institutional features across samples of countries, not to differences in legal proxies of central bank independence. Already results from a homogenous group of industrial countries indicate that some indices perform “better” than others.

Official URL: http://www.ceeol.com/aspx/issuedetails.aspx?issueid=F7AA27BA-1FA2-4B2D-80EA-586F10A7D291&articleid=08E7C735-3105-460D-AD33-01E72B7FF36F

Title:Quest for the Best: How to Measure Central Bank Independence and Show its Relationship with Inflation
Creators:
Maslowska, Aleksandra A.
Uncontrolled Keywords:Central bank independence, political autonomy, economic autonomy, institution, estimation
Subjects:H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
H Social Sciences > HF Commerce
Divisions:Section of external journals > AUCO Czech Economic Review
Journal or Publication Title:AUCO Czech Economic Review
Volume:5
Number:2
Page Range:pp. 132-161
ISSN:1802-4696
Publisher:Charles University
Related URLs:
URLURL Type
http://auco.cuni.czPublisher
http://avi.lib.cas.cz/node/183Publisher
ID Code:6769
Item Type:Article
Deposited On:29 Aug 2011 19:17
Last Modified:29 Aug 2011 17:17

Citation

Maslowska, Aleksandra A. (2011) Quest for the Best: How to Measure Central Bank Independence and Show its Relationship with Inflation. AUCO Czech Economic Review, 5 (2). pp. 132-161. ISSN 1802-4696

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