The long‐run disinflationary effects of central bank independence

Angelos Athanasopoulos (), Donato Masciandaro () and Davide Romelli ()
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Angelos Athanasopoulos: Central Bank of Ireland
Donato Masciandaro: Bocconi University
Davide Romelli: Trinity College Dublin

Economic Papers from Trinity College Dublin, Economics Department

Abstract: This paper provides novel evidence of the long‐run effects of reforms in central bank independence on inflation. Using instrumental‐variable local projections, we show that improvements in central bank independence have a much larger impact on inflation in the long run compared to the short run. Contrary to most of the previous literature, we also find that these long‐run effects are larger in developing countries. Our results are robust to alternative local projection designs, including doubly robust and difference‐in‐differences specifications. Finally, we provide evidence that reforms that strengthen central bank independence also reduce inflation persistence, reinforcing the effectiveness of monetary policy.

Keywords: central bank design; central bank independence; inflation; persistence; central bank reforms (search for similar items in EconPapers)
JEL-codes: E31 E5 E52 E58 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2026-09
New Economics Papers: this item is included in nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep2026

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