Central Bank Independence: An Update of Theory and Evidence
Free University Berlin - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Jakob de Haan
University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)
Sylvester C. W. Eijffinger
Tilburg University (CentER) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)
CESifo Working Paper Series No. 255
This paper reviews recent research on central bank independence (CBI). After we have distinguished between independence and conservativeness, the literature on optimal inflation contracts is discussed, followed by research in which the inflationary bias is endogenised. Finally, the various challenges that have been raised against previous empirical findings on CBI are reviewed. We conclude that the negative relationship between CBI and inflation is quite robust.
Number of Pages in PDF File: 54
JEL Classification: D72, E58
Date posted: February 8, 2001
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