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Central bank independence and transparency: Evolution and effectiveness

Christopher Crowe () and Ellen Meade ()

European Journal of Political Economy, 2008, vol. 24, issue 4, 763-777

Abstract: Over the past two decades, the pace of central bank reforms in terms of institutional independence and transparency has been particularly brisk. This paper examines the current level of central bank independence (CBI) and transparency in a broad sample of countries using newly constructed measures, and looks at the evolution in both measures from an earlier time period. The legal independence of central banks has increased markedly since the 1980s, while the rise in transparency since the late 1990s has been less impressive. Exploiting the time dimension of our data to eliminate country fixed effects and using instrumental variable estimation to overcome endogeneity concerns, we present robust evidence that greater CBI is associated with lower inflation. We also find that enhanced transparency practices are associated with the private sector making greater use of information provided by the central bank.

Keywords: Central; bank; independence; Transparency; Monetary; policy (search for similar items in EconPapers)
Date: 2008
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Working Paper: Central Bank Independence and Transparency; Evolution and Effectiveness (2008) Downloads
Working Paper: Central Bank Independence and Transparency: Evolution and Effectiveness (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:24:y:2008:i:4:p:763-777

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