{
  "title": "Credibility of Central Bank Independence Revisited",
  "publication": "IMF Working Papers, January 1, 1999",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868",
  "overlayPath": "/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/index.md",
  "summary": "The specific role of central bank independence in determining the overall credibility of monetary policy is addressed in this paper.",
  "sections": [
    {
      "heading": "Research question and core argument",
      "content": "- Examines the specific role of central bank independence in determining the overall credibility of monetary policy.\n- Argues that the credibility of delegating monetary policy to an independent central bank is endogenous to the credibility of the inflation target.\n- Highlights that a “conservative” inflation target may not be compatible with the fiscal policy stance.\n- Shows that lack of transparency in designing the institutional set-up is welfare-reducing."
    },
    {
      "heading": "Key findings",
      "content": "- Credibility of central bank independence is not exogenous; it depends on the credibility of the inflation target.\n- A “conservative” inflation target can conflict with fiscal policy, undermining delegation credibility.\n- Institutional-design opacity lowers welfare."
    },
    {
      "heading": "Policy implications and recommendations (as implied by the paper)",
      "content": "- Ensure consistency between inflation targets and fiscal policy stance to preserve credibility of delegated monetary policy.\n- Design institutional arrangements with transparency to avoid welfare losses associated with opaque setups.\n- Consider interactions between monetary delegation and fiscal credibility when evaluating central bank independence reforms."
    },
    {
      "heading": "Subject headings and keywords",
      "content": "- Subject: Central bank autonomy, Fiscal policy, Inflation, Inflation targeting, Public sector\n- Keywords: central bank, WP\n\nSource: IMF Working Papers landing page for \"Credibility of Central Bank Independence Revisited\" by Timo T Valila (January 1, 1999), Working Paper No. 1999/002.\n\n---\n\n Content in this bundle\n\n- Credibility of Central Bank Independence Revisited - WP/99/02\n  - Credibility of Central Bank Independence Revisited - WP/99/02 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Credibility of Central Bank Independence Revisited - WP/99/02 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/bundle-manifest.json)",
    "Authors: Timo T Valila",
    "Published: January 1, 1999",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451841749.001",
    "Examines the specific role of central bank independence in determining the overall credibility of monetary policy.",
    "Argues that the credibility of delegating monetary policy to an independent central bank is endogenous to the credibility of the inflation target.",
    "Highlights that a “conservative” inflation target may not be compatible with the fiscal policy stance.",
    "Shows that lack of transparency in designing the institutional set-up is welfare-reducing.",
    "Credibility of central bank independence is not exogenous; it depends on the credibility of the inflation target.",
    "A “conservative” inflation target can conflict with fiscal policy, undermining delegation credibility.",
    "Institutional-design opacity lowers welfare.",
    "Ensure consistency between inflation targets and fiscal policy stance to preserve credibility of delegated monetary policy.",
    "Design institutional arrangements with transparency to avoid welfare losses associated with opaque setups.",
    "Consider interactions between monetary delegation and fiscal credibility when evaluating central bank independence reforms.",
    "Subject: Central bank autonomy, Fiscal policy, Inflation, Inflation targeting, Public sector",
    "Keywords: central bank, WP",
    "**Credibility of Central Bank Independence Revisited - WP/99/02**"
  ],
  "related": [
    {
      "title": "Credibility of Central Bank Independence Revisited - WP/99/02",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/1999/_wp9902.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/1999/_wp9902.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/1999/_wp9902.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/index.md",
    "json": "/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/30/credibility-of-central-bank-independence-revisited-2868/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T05:46:34.511Z"
}