Central Bank Independence and Transparency: Evolution and Effectiveness
IMF Working Papers, May 1, 2008
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- Central Bank Independence and Transparency: Evolution and Effectiveness
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Bibliographic details
- Authors: Christopher W. Crowe, Ellen E. Meade
- Published: May 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451869798.001
Research scope and objectives
- Examines the current level of central bank independence (CBI) and transparency in a broad sample of countries using newly constructed measures.
- Analyzes the evolution in both CBI and transparency from an earlier time period.
- Investigates determinants of changes in CBI and transparency and their macroeconomic consequences.
Key empirical methods
- Exploits the time dimension of the data to eliminate country fixed effects.
- Uses instrumental variable estimation to overcome endogeneity concerns.
Main findings
- Increases in CBI have tended to occur in more democratic countries and in countries with high levels of past inflation.
- More independent central banks tend to be more transparent.
- Transparency is positively correlated with measures of national institutional quality.
- Greater CBI is associated with lower inflation (evidence presented using fixed-effects and instrumental variable approaches).
- Enhanced transparency practices are associated with the private sector making greater use of information provided by the central bank.
Subject areas and keywords
- Subjects: Banking, Central bank autonomy, Central bank transparency, Central banks, Exchange rate arrangements, Exchange rate flexibility, Foreign exchange, Inflation, Prices
- Keywords: CBI index, Central bank autonomy, central bank independence, Central bank transparency, country sample, Exchange rate arrangements, Exchange rate flexibility, Global, independence measure, Inflation, inflation bias, inflation variability, monetary policy, regime variable, transparency, transparency practice, WP
Content in this bundle
- 1. Mean Level