CENTRAL BANK INDEPENDENCE AND PRICE STABILITY UNDER ALTERNATIVE POLITICAL REGIMES: A GLOBAL EVIDENCE

Afees Salisu, Elias A. Udeaja () and Silva Opuala-Charles ()
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Elias A. Udeaja: Central Bank of Nigeria
Silva Opuala-Charles: Garden City Premier Business School, Port Harcourt, Nigeria

Bulletin of Monetary Economics and Banking, 2022, vol. 25, issue 2, 155-172

Abstract: In this paper, we explore the connection between Central Bank Independence (CBI) and inflation under alternative political regimes. We formulate a predictive model that accommodates CBI in the analysis of inflation and thereafter we regroup the countries based on the choice of political regimes as well as the level of development. We find that CBI has a statistically significant and negative effect on inflation in countries adopting full democratic and partial autocratic regimes; but are statistically insignificant in countries operating full autocratic and partial democratic regimes. The results leading to this conclusion are robust to different levels of development.

Keywords: Central bank independence; Price stability; Democratic regime; Autocratic regime; Panel data analysis (search for similar items in EconPapers)
JEL-codes: C33 E31 E42 E59 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:25:y:2022:i:2b:p:155-172

DOI: 10.21098/bemp.v25i2.2004

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