Does Central Bank Independence Really Matter? Re-Assessing the Role of the Independence of Monetary Policymakers in Macroeconomic Outcomes

Athina Zervoyianni, Athanasios Anastasiou and Andreas Anastasiou ()
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Andreas Anastasiou: Research Department, Barclays Bank, London, UK

Working Paper series from Rimini Centre for Economic Analysis

Abstract: Using both standard regressions and Markov-Chain Monte-Carlo estimation methods from a Bayesian perspective and a sample of 39 countries for 1981-2006, we re-examine the role of central-bank independence (CBI) in macroeconomic outcomes. Control variables commonly used in the literature are examined together with a number of other variables to which existing studies often give little attention. Our results suggest that lower inflation should be seen as resulting from a broad-range of institutional and structural factors, with CBI failing to play the key role. We also find that central-bank independence has no favourable effect on employment growth, while it increases output volatility following supply-side shocks.

Keywords: Macroeconomic performance; central-bank independence, globalization & labour markets; Bayesian methods (search for similar items in EconPapers)
JEL-codes: C11 E24 E52 E63 (search for similar items in EconPapers)
Date: 2013-01
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Citations: View citations in EconPapers (2)

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Journal Article: Does central bank independence really matter? Re-assessing the role of the independence of monetary policy-makers in macroeconomic outcomes (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:03_13

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