The Effect of Central Bank Independence on Price Stability: The Case of Indonesia

Yessy Andriani and Prof. Prasanna Gai

Bulletin of Monetary Economics and Banking, 2013, vol. 15, issue 4, 353-376

Abstract: This paper investigates the relationship between central bank independence (CBI) and inflation in Indonesia during 1970-2006. Using partial adjustment Ordinary Least Square (OLS) and Engel Granger Error Correction Model, the result shows that legal CBI index inversely affect the inflation, while the turnover of governor is not significant. This result emphasizes Bank Indonesia to strengthen its independency in order to achieve his inflation target.

Keywords: Central bank independency; Inflation; Error Correction Model. (search for similar items in EconPapers)
JEL-codes: C32 E58 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:15:y:2013:i:4g:p:353-376

DOI: 10.21098/bemp.v15i4.431

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