Central Bank Independence and Inflation: The Case of Greece
Revista de Economia del Rosario Bogota (Colombia), Vol. 9, No. 1, pp. 95-109, June 2006
15 Pages Posted: 29 Aug 2006
Abstract
This paper discusses the argument for Central Bank Independence (CBI) in the case of Greece. Using a time series approach and the last data available before Greece joined the EMU, the hypothesis that Central Bank Independence is important for controlling inflation is examined. Employing two indices, which serve as proxies for CBI, Legal CBI and TOR, the inverse relationship between CBI and inflation was confirmed. The interactions between the variability of inflation and CBI were also investigated. Furthermore, evidence was found to suggest that the rate of turnover Granger causes inflation.
Keywords: Central Bank Independece, inflation, Greece
JEL Classification: E58, E52
Suggested Citation: Suggested Citation
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