Fiscal policymaking and the central bank institutional constraint Una Vez Más: New Latin American evidence

Richard Burdekin and Leroy O. Laney
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Leroy O. Laney: Hawaii Pacific University

Public Choice, 2016, vol. 167, issue 3, No 6, 277-289

Abstract: Abstract Evidence on the degree to which central bank independence can constrain government budget deficits remains surprisingly scarce. This paper finds empirical support for the importance of the central institutional constraint for a 14-country sample of Latin American countries over 1990–2012. These results suggest that greater central bank autonomy has indeed helped reign in fiscal excesses in a region that has been plagued by inflationary deficit expansion for much of the post-war period. The ability to potentially discipline government policy adds to an independent central bank’s inherent role in adding to the checks and balances essential to a well-functioning democracy.

Keywords: Central Bank independence; Fiscal policy; Latin America (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s11127-016-0341-8

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