Does Central Bank Financial Strength Matter for Inflation? An Empirical Analysis

Soňa Benecká, Tomas Holub, Narcisa Kadlčáková and Ivana Kubicová

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: This paper analyses empirically the link between central bank financial strength and inflation. The issue has become very topical in recent years as many central banks have accumulated large financial exposures and the risk of losses has risen. We conclude that even though some estimates show a statistically significant and potentially non-linear negative relationship between several measures of central bank financial strength and inflation, this link appears rather weak and not as robust as suggested by the previous - very limited - literature. In general, other inflation determinants play a much more important and robust role.

Keywords: Central bank financial strength; central bank independence; inflation; monetary policy; seigniorage. (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2012/03

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