Central Bank Independence: A Free Lunch?

January 1, 1996

Preview Citation

Format: Chicago

Guy Debelle. Central Bank Independence: A Free Lunch?, (USA: International Monetary Fund, 1996) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper extends the analysis of central bank independence to a model in which there is more than one policymaker. It shows that the degree of central bank independence as generally defined in the existing theoretical literature is only one of the influences on macroeconomic performance. The objectives of the fiscal authority, the commitment mechanisms available to the authorities and the nature of the policy game play a key role in determining the inflation rate and output in the economy. Furthermore, the model can be solved for the optimal degree of inflation aversion of the central bank. , a Working Paper and the authors) would welcome any comments on the present text Citations should refer to a Working Paper of the International Monetary Fund, mentioning the authors), and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

Subject: Banking, Central bank autonomy, Central bank mandate, Central bank organization, Central banks, Expenditure, Inflation, Prices

Keywords: Central bank autonomy, Central bank bank charter, Central bank mandate, Central bank organization, Central bank place, Central Banking, Equilibrium inflation, Government spending, Inflation, Inflation aversion, Inflation expectation, Inflation outcome, Inflation penalty, Inflation performance, Inflation rate, Monetary Policy, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1996/001
Stock No:

WPIEA0011996
ISBN:

9781451841589
ISSN:

1018-5941

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