Fiscal Policymaking and the Central Bank Institutional Constraint Una Vez Más: New Latin American Evidence

26 Pages Posted: 2 Jun 2016

See all articles by Richard C. K. Burdekin

Richard C. K. Burdekin

Claremont McKenna College - Robert Day School of Economics and Finance

Leroy Laney

Hawaii Pacific University (Deceased)

Date Written: June 2, 2016

Abstract

Evidence on the degree to which central bank independence can constrain government budget deficits remains surprisingly scarce. This paper finds empirical support for the importance of the central institutional constraint for a 14-country sample of Latin American countries over 1990-2012. These results suggest that greater central bank autonomy has indeed helped reign in fiscal excesses in a region that has been plagued by inflationary deficit expansion for much of the post-war period. The ability to potentially discipline government policy adds to an independent central bank’s inherent role in adding to the checks and balances essential to a well-functioning democracy.

Suggested Citation

Burdekin, Richard C. K. and Laney, Leroy, Fiscal Policymaking and the Central Bank Institutional Constraint Una Vez Más: New Latin American Evidence (June 2, 2016). Public Choice, Forthcoming; Claremont McKenna College Robert Day School of Economics and Finance Research Paper 2789176. Available at SSRN: https://ssrn.com/abstract=2789176 or http://dx.doi.org/10.2139/ssrn.2789176

Richard C. K. Burdekin (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth Street
Claremont, CA 91711
United States

Leroy Laney

Hawaii Pacific University (Deceased)

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