Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-09T06:55:36.071Z Has data issue: false hasContentIssue false
  • English
  • Français

Central Bank Independence, Disinflations and Monetary Policy

Published online by Cambridge University Press:  20 January 2017

Ian Down
Ian Down*
Affiliation:
University of Tennessee, Knoxville
Get access Rights & Permissions [Opens in a new window]

Abstract

Analyses of central bank independence (CBI) have generated two sets of apparently contradictory results - CBI appears to be both inversely related to inflation and positively related to the rise in unemployment and slowdown in economic growth during disinflations. I suggest that these results may issue from autonomous central banks being associated with sharper, more aggressive disinflations. To test the proposition I use two measures of policy stance, one of which contains more information concerning policymaker's expectations than has heretofore been the case. The results suggest a need to qualify yet further the optimality of CBI.

Keywords

central bank independencemonetary policy
Type
Article
Information
Business and Politics , Volume 10 , Issue 3 , December 2008 , pp. 1 - 20
Copyright
Copyright © V.K. Aggarwal 2008 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alesina, Alberto, and Summers, Lawrence. (1993). Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence. Journal of Money, Credit and Banking Volume 25, Issue 2: 151–162.CrossRefGoogle Scholar
Ball, Lawrence. (1994). What Determines the Sacrifice Ratio? (In Mankiw, Gregory N, (ed), Monetary Policy. Chicago, IL: University of Chicago Press.)Google Scholar
Baltensperger, Ernst and Kugler, Peter. (2000). Central Bank Independence and Sacrifice Ratios: Some Further Considerations. Open Economies Review, 11: 111–125.CrossRefGoogle Scholar
Berger, Helge, de Haan, Jakob and Eijffinger, Sylvester CW. (2001). Central Bank Independence: an update of Theory and Evidence. Journal of Economic Surveys, Volume 15, Issue 1: 3–40.CrossRefGoogle Scholar
Brumm, Harold and Krashevski, Richard. (2003). The Sacrifice Ratio and Central Bank Independence Revisited. Open Economies Review 14: 157–168.CrossRefGoogle Scholar
Clarida, Richard, Gali, Jordi and Gertler, Mark. (1998). Monetary Policy Rules in Practice: Some International Evidence, European Economic Review, 42: 1033–1067.CrossRefGoogle Scholar
Clarida, Richard, Gali, Jordi and Gertler, Mark. (1999). The Science of Monetary Policy: A New Keynesian Perspective. Journal of Economic Literature, Volume XXXVII, 1661–1707.Google Scholar
Clark, William. (2003). Capitalism, Not Globalism. (Ann Arbor, MI: University of Michigan Press.)CrossRefGoogle Scholar
Cukierman, Alex. (1992). Central Bank Strategy, Credibility, and Independence: Theory and Evidence. (Cambridge, MA: MIT Press.)Google Scholar
Cukierman, Alex, Steven, Webb and Bilin, Neyapti. (1994). Measuring Central Bank Independence and Its Effect on Policy Outcomes. (San Francisco, CA: ICS Press.)Google Scholar
Cukierman, Alex. (2002). Does a Higher Sacrifice Ratio Mean that Central Bank Independence is Excessive? Annals of Economics and Finance, 3: 1–25.Google Scholar
Cusack, Thomas R. (2001). Partisanship in the setting and coordination of fiscal and monetary policies European Journal of Political Research, 40: 93–115.Google Scholar
Daniels, Joseph P, Nouzard, Farrokh and D VanHoose, David. (2005). Openness, Central Bank Independence and the Sacrifice Ratio. Journal of Money, Credit and Banking, Volume 37, Issue 2: 371–379.CrossRefGoogle Scholar
Diana, Giuseppe and Sidiropoulos, Moise (2004), Central Bank Independence, Speed of Disinflation and the Sacrifice Ratio. Open Economies Review, 15: 385–402.CrossRefGoogle Scholar
Diana, Giuseppe and Sidiropoulos, Moise (2006), Central Bank Independence and the Cost of Disinflation: Why the Wage Contracts Length Matters. International Advances in Economic Research, Volume 12, Issue 3: 287–97.CrossRefGoogle Scholar
Down, Ian. (2004). Central Bank Independence, Disinflations and the Sacrifice Ratio, Comparative Political Studies, Volume 37, Number 4: 399–434.CrossRefGoogle Scholar
Down, Ian. (2003). Pathways to Price Stability, unpublished manuscript.Google Scholar
Eijffinger, Sylvester C W and de Haan, Jakob. 1996. The Political Economy of Central-Bank Independence. Special Papers in International Economics, No 19, Princeton: Department of Economics, Princeton University.Google Scholar
Fischer, Andreas. (1996). Central Bank Independence and Sacrifice Ratios. Open Economies Review, 7: 5–18.CrossRefGoogle Scholar
Gaertner, Manfred. (1996). Central Bank Independence and the Sacrifice Ratio: The Dark Side of the Force. Swiss Journal of Economics and Statistics. 133 (3): 512–538.Google Scholar
Genberg, Hans. (1977). The Concept and Measurement of the World Price Level and Rate of Inflation. Journal of Monetary Economics, 3: 231–252.CrossRefGoogle Scholar
Golden, Miriam, Wallerstein, Michael and Lange, Peter. (1998). Union Centralization Among Advanced Industrial Societies. UCLA and Duke University.Google Scholar
Grilli, Vittorio, Donato, Masciandaro and Guido, Tabellini. (1991). Political and Monetary Institutions and Public Finance Policies in the Industrial Countries, Economic Policy 13: 341–92.Google Scholar
Huber, Evelyne, Ragin, Charles and Stephens, John D, Comparative Welfare States Data Set, Northwestern University and University of North Carolina, 1997.Google Scholar
Jordan, Thomas J. (1997). Disinflation Costs, Accelerating Gains, and Central Bank Independence. Weltwirtschaftliches Archiv, Vol 133, No 1: 1–21.CrossRefGoogle Scholar
Jordan, Thomas J. (1999). Central Bank Independence and the Sacrifice Ratio. European Journal of Political Economy. Volume 15: 229–255.CrossRefGoogle Scholar
Judd, John P and Rudebusch, Glenn D. (1998). Taylor's Rule and the Fed: 1970-1997, Federal Reserve Bank of San Fransisco, Economic Review, Number 3.Google Scholar
Kane, EJ. (1980). Politics and Fed Policymaking: The more things change the more they remain the same, Journal of Monetary Economics, 6: 199–211.CrossRefGoogle Scholar
Keefer, Philip, and Stasavage, David. (2002). Checks and Balances, Private Information, and the Credibility of Monetary Commitments. International Organization, Volume 56, 4: 751–774.CrossRefGoogle Scholar
King, Gary, Tomz, Michael, and Wittenberg, Jason. (2000). Making the Most of Statistical Analyses: Improving Interpretation and Presentation American Journal of Political Science, 44, no. 2: 347–61.CrossRefGoogle Scholar
Oatley, Thomas H. (1997). Monetary Politics. (Ann Arbor, MA: University of Michigan Press.)Google Scholar
Oatley, Thomas H. (1999). Central bank independence and inflation: Corporatism, partisanship, and alternative indices of central bank independence, Public Choice, 98 (March), 399–413.CrossRefGoogle Scholar
Posen, Adam. (1995). Central Bank Independence and Disinflationary Credibility: A Missing Link? Federal Reserve Bank of New York, Staff Reports, Number 1, May 1995.Google Scholar
Romer, David. (1993). Openness and Inflation: Theory and Evidence.” Quarterly Journal of Economics, 108: 869–903.CrossRefGoogle Scholar
Siklos, Pierre L and Johnson, David R. (1996). Political and Economic Determinants of Interest Rate Behavior: Are Central Banks Different? Economic Inquiry, Volume 34, No. 4: 708–729.Google Scholar
Siklos, Pierre. (2002). The Changing Face of Central Banking. (New York, NY: Cambridge University Press.)CrossRefGoogle Scholar
Taylor, John B. (1993). Discretion versus policy rules in practice. Carnegie-Rochester Conference Series on Public Policy, 39.CrossRefGoogle Scholar
Taylor John, B. (1999). Monetary Policy Rules. NBER Conference Report. (Chicago, IL: University of Chicago Press.)Google Scholar
Tomz, Michael, Wittenberg, Jason, and King, Gary. (2001). CLARIFY: Software for Interpreting and Presenting Statistical Results. Version 2.0 Cambridge, MA: Harvard University, June 1. http://gking.harvard.edu.Google Scholar