The Effects of Central Bank Independence and Inflation Targeting On Macroeconomic Performance: Evidence from Natural Experiments

Michael Parkin ()

Review of Economic Analysis, 2014, vol. 6, issue 1, 1-35

Abstract: I investigate the effects of central bank independence and inflation targeting on macroeconomic performance in 26 advanced economies during the period 1980 to 2011. I find that both improve macroeconomic performance but inflation targeting is the more effective arrangement. When a central bank becomes more independent, it lowers the inflation rate and the variability of inflation but has no effect on real GDP or unemployment. When a central bank becomes an inflation targeter, it lowers the inflation rate, the variability of inflation, the variability of real GDP growth and the output gap, and has no effect on unemployment.

Keywords: Inflation Targeting; Central Bank Independence; Monetary Policy; Monetary Policy Instrument; Policy Effects; Short-Run Trade-Off; Short-Run Phillips Curve; Taylor Curve (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.rofea.org/index.php?journal=journal&pag ... D=157&path%5B%5D=116 (application/pdf)

Related works:
Working Paper: The Effects of Central Bank Independence and Inflation Targeting on Macroeconomic Performance: Evidence from Natural Experiments (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ren:journl:v:6:y:2014:i:1:p:1-35

Access Statistics for this article

Review of Economic Analysis is currently edited by Dr. Jerzy (Jurek) Konieczny

More articles in Review of Economic Analysis from Digital Initiatives at the University of Waterloo Library
Bibliographic data for series maintained by Dr. Jerzy (Jurek) Konieczny ().