The Sacrifice Ratio and Central Bank Independence Revisited

Harold Brumm () and Richard Krashevski

Open Economies Review, 2003, vol. 14, issue 2, 157-168

Abstract: Several recent studies make use of cross-country data to examine the relationship between a country's sacrifice ratio and the extent to which its central bank is insulated from political influence. These studies report a positive correlation between these two variables. However, these studies employ econometric methodologies that do not account for the measurement error which contaminates their proxies for central bank independence. This paper makes use of an alternative econometric methodology, one that does account for this measurement error, and finds a strong negative relationship between the sacrifice ratio and Central Bank independence. Copyright Kluwer Academic Publishers 2003

Keywords: measurement error; Central Bank independence; sacrifice ratio (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (14)

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DOI: 10.1023/A:1022361929854

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