Central Bank Independence and Price Stability: Evidence from 23 OECD-countries

Sven-Olov Daunfeldt () and Xavier de Luna ()
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Xavier de Luna: Department of Statistics, Postal: S 901 87 Umeå, Sweden

No 589, Umeå Economic Studies from Umeå University, Department of Economics

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 (search for similar items in EconPapers)
JEL-codes: C14 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fin and nep-mon
Date: 2002-09-05, Revised 2003-06-12
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:umnees:0589

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