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Central Bank Credibility, Independence, and Monetary Policy

Abdelkader Aguir ()
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Abdelkader Aguir: Lorraine University, BETA Lab UMR 7522 University of Lorraine and UR MOFID UR 13-ES60, Metz, France

Journal of Central Banking Theory and Practice, 2018, vol. 7, issue 3, 91-110

Abstract: The main motives behind the adoption of an inflation targeting regime largely relate to the notion of credibility, transparency of monetary policy and the autonomy of the central bank, which explicitly undertakes to achieve a certain inflation target. This paper examines the effects of inflation targeting in emerging economies in relation to the degree of independence of the central bank and the credibility of monetary policy. We find effects in emerging economies with little central bank independence, so our findings suggest that the central bank’s credibility, transparency and independence is a prerequisite for emerging economies to experience a decline in inflation following the adoption of inflation targeting.

Keywords: Credibility; transparency; central bank independence; inflation targeting (search for similar items in EconPapers)
JEL-codes: E52 E63 (search for similar items in EconPapers)
Date: 2018
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