IMF Working Papers

Legal Central Bank Independence and Inflation in Latin America During the 1990s

By Luis Ignacio Jácome

December 1, 2001

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Luis Ignacio Jácome. Legal Central Bank Independence and Inflation in Latin America During the 1990s, (USA: International Monetary Fund, 2001) 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 reviews central banks’ legal reform in Latin America during the 1990s and discusses the status of central bank independence in the region. Based on this information, it builds a simplified index of central bank independence which, in addition to the commonly used criteria of political and economic independence, incorporates provisions of central banks’ financial autonomy, accountability, and lender-of-last-resort. The paper finds a moderate negative correlation between increased central bank independence and inflation during 1999–2001 in 14 Latin American countries. Dissagregating the index, the same analysis suggests that economic independence is the key component driving the observed negative correlation between legal central bank independence and inflation.

Subject: Banking, Central bank accountability, Central bank autonomy, Central bank legislation, Central banks, Inflation, Legal support in revenue administration, Prices, Revenue administration

Keywords: Capital integrity, Central America, Central bank accountability, Central bank authority, Central bank autonomy, Central bank bank transaction, Central bank board of directors, Central bank director, Central bank governor, Central bank independence, Central bank involvement, Central bank legislation, Central bank loss, Central bank reform, Exchange rate, Financial statements, Governance body, Government paper, Government participation, Inflation, Interest rate, Latin American countries, Legal support in revenue administration, Recording central bank bank operation, WP

Publication Details

  • Pages:

    41

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2001/212

  • Stock No:

    WPIEA2122001

  • ISBN:

    9781451874891

  • ISSN:

    1018-5941