Does central bank independence reflect monetary commitment properly? Methodical considerations

Andreas Freytag ()

Banca Nazionale del Lavoro Quarterly Review, 2001, vol. 54, issue 217, 181-208

Abstract: Central bank independence (CBI) has attracted much attention in economics and politics in recent years. The concept is based on the political economy literature onmonetary policy. In this paper, we argue that CBI is an incomplete approximation to legal monetary commitment. We first discuss the nature and criteria ofcommitment, then show the shortcomings of the most important indices of CBI before we introduce an alternative measure of legal monetary commitment. This measure is more comprehensive and includes more aspects of commitment than the indices of CBI. A first empirical comparison of this index and a leading CBI index strengthens the argument.

Keywords: Monetary Policy; Monetary; Policy (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (16)

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