Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 95: Are Central Bank Independence Reforms Necessary for Achieving Low and Stable Inflation?

Sven-Olov Daunfeldt (), Mats Landström and Niklas Rudholm
Additional contact information
Sven-Olov Daunfeldt: HUI Research, Postal: SE-103 29 Stockholm, Sweden, Dalarna University, SE-781 88 Borlänge, Sweden
Mats Landström: University of Gävle, Postal: SE-801 76 Gävle, Sweden
Niklas Rudholm: HUI Research, Postal: SE-103 29 Stockholm, Sweden, Dalarna University, SE-781 88 Borlänge, Sweden

Abstract: Using data on the occurence of central bank independence (CBI) reforms in 131 countries during 1980-2005, we test whether they were important in reducing inflation and maintaining price stability. CBI reforms are found to have reduced inflation on average 3.31% when countries with historically high inflation rates are included. But countries with lower inflation have reduced it without institutional reforms granting central banks more independence, undermining the theoretical time-inconsistency case for CBI. There is furthermore no evidence that CBI reforms have helped reduce inflation variability.

Keywords: inflation; institutional reform; monetary policy; time-inconsistency

JEL-codes: E52; E58; P48

36 pages, July 6, 2013

Full text files

MediaBinaryLoader.ax...e_ForceDownload=true PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Hans Seerar Westerberg ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:huiwps:0095This page generated on 2024-09-13 22:15:10.