The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence

85 Pages Posted: 13 Nov 2006

See all articles by Marco Arnone

Marco Arnone

Centre for Macroeconomics & Finance Research (CeMaFiR); Catholic University of the Sacred Heart of Milan - Institute for Economic Policy

Bernard Laurens

International Monetary Fund (IMF) - Monetary and Foreign Exchange Operations Division

Jean-François Segalotto

Catholic University of the Sacred Heart of Milan

Date Written: October 2006

Abstract

This paper presents a survey of the literature on the measurement of central bank autonomy. We distinguish inputs that constitute the building blocks in the literature, and the literature that builds on them. Issues including sensitivity analysis, robustness, and endogeneity are discussed. The review shows that empirical evidence regarding the beneficial effects of central bank autonomy is substantial, although some technical issues still remain for further research. In particular, central bank autonomy raises the issue of subjecting the monetary authorities to democratic control; this calls for additional research on the linkages between central bank autonomy and accountability and transparency. Additional empirical analysis on the relationship between the financial strength of the central bank and its de facto autonomy, and between its autonomy and financial stability, would also be desirable.

JEL Classification: E52, E58

Suggested Citation

Arnone, Marco and Laurens, Bernard J. and Segalotto, Jean-François, The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence (October 2006). IMF Working Paper No. 06/227, Available at SSRN: https://ssrn.com/abstract=941289

Marco Arnone (Contact Author)

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

Piazza Mirabello, 2
Milano, 20121
Italy

HOME PAGE: http://www.a-bpfoundation.org

Catholic University of the Sacred Heart of Milan - Institute for Economic Policy ( email )

Via Necchi, 5
20123 Milan
Italy
+39 02 72342921 (Phone)

Bernard J. Laurens

International Monetary Fund (IMF) - Monetary and Foreign Exchange Operations Division ( email )

Monetary and Capital Markets Department
700 19th Street NW
Washington, DC 20431
United States

Jean-François Segalotto

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

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