Economic policy responses to the COVID-19 pandemic: The role of central bank independence

Ceyhun Elgin, Abdullah Yalaman, Sezer Yasar and Gokce Basbug

Economics Letters, 2021, vol. 204, issue C

Abstract: Is central bank independence (CBI) associated with economic policy responses to mitigate the adverse economic effects of the COVID 19 pandemic? In this paper, we provide cross-country evidence that it does. Our results generally indicate that more independent monetary policy authorities have adopted smaller cuts in the policy rate and reserve requirements. However, fiscal and macro-financial packages are relatively larger in countries with more independent central banks. These results are robust to different sets of control variables and different econometric specifications that include an instrumental variable estimation.

Keywords: COVID-19; Central bank independence; Monetary policy; Fiscal policy (search for similar items in EconPapers)
JEL-codes: E43 E58 E60 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:204:y:2021:i:c:s0165176521001518

DOI: 10.1016/j.econlet.2021.109874

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