Informal central bank independence: an analysis for three European countries

David Cobham, Stefania Cosci and Fabrizio Mattesini
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Stefania Cosci: LUMSA, Rome

No 116, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: Changes in formal and informal central bank independence (CBI) in France, Italy and the UK in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks, defined as the ability to pursue price stability regardless of the government’s preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the central bank, the existence of antiinflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the central bank. These broad trends help to explain some of the inflation experience of the 1980s and 1990s which cannot be understood in terms of changes to formal CBI.

Keywords: Monetary policy; central bank independence; inflation (search for similar items in EconPapers)
JEL-codes: E42 E58 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2008-07-14, Revised 2008-07-14
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 (10)

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Journal Article: INFORMAL CENTRAL BANK INDEPENDENCE: AN ANALYSIS FOR THREE EUROPEAN COUNTRIES (2008)
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