Scandinavian Working Papers in Economics
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Department of Economics, UmeŚ University UmeŚ Economic Studies, Department of Economics, UmeŚ University

No 589:
Central Bank Independence and Price Stability: Evidence from 23 OECD-countries

Sven-Olov Daunfeldt () and Xavier de Luna ()

Abstract: In this paper, we use a non-parametric regression method to compare the transition process from high to low inflation with the implementation dates of central bank independence reforms. In a majority of the countries, price stability is achieved before more independence is given to the central bank. This suggests that the credibility of a low inflation goal can be achieved without institutional reforms which grant the central bank more independence from the political policymakers.

Keywords: Central bank reform; inflation targeting; monetary policy; non-parametric decomposition; (follow links to similar papers)

JEL-Codes: C14; E52; E58; (follow links to similar papers)

14 pages, September 5, 2002, Revised June 12, 2003

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