The Sacrifice Ratio and Central Bank Independence Revisited

Several recent studies make use of cross-country data to examine the relationship between a country's sacrifice ratio and the extent to which its central bank is insulated from political influence. These studies report a positive correlation between these two variables. However, these studies employ econometric methodologies that do not account for the measurement error which contaminates their proxies for central bank independence. This paper makes use of an alternative econometric methodology, one that does account for this measurement error, and finds a strong negative relationship between the sacrifice ratio and Central Bank independence.     

Central Bank Independence,Speed of Disinflation and the Sacrifice Ratio

Using a theoretical model in which the degree of central bank independence affects the degree of inflation persistence and therefore the speed of disinflation, this paper suggests that sacrifice ratios are lower when central bank independence is higher. Empirical tests, using estimates of sacrifice ratios based on disinflation episodes for 18 OECD countries during the 1960–90 period, show that this result also holds empirically. This finding seems to be consistent with the credibility hypothesis by pointing out that an independent central bank may produce a credibility bonus.     

Central Bank Behavior and Statutory Independence

This paper integrates the Taylor reaction function literature with the literature on central bank independence (CBI). The central bank??s policy reaction function describes its behaviors, which measures the practical CBI, as opposed to the legal CBI measured by CBI indices. By analyzing the relationship between various legal CBI indices and the central banks?? reactions to inflation for 18 OECD countries, we find that the difference of behaviors among central banks is consistent with the economic measure of independence, which measures how easy it is for the government to finance its deficits by direct access to credit from the central bank.     

Disinflation costs, accelerating inflation gains, and central bank independence

Disinflation Costs, Accelerating Inflation Gains, and Central Bank Independence. - This paper considers the impact of central bank independence on both the costs of disinflation and the gains of accelerating inflation. For this purpose, sacrifice ratios for disinflation episodes and benefice ratios for accelerating inflation episodes are constructed by using a new method. The ratios are calculated for 19 industrial countries over the period 1960–1992. The results indicate that central bank independence only matters during disinflation episodes: Sacrifice ratio and output loss are higher, the more independent the central bank is; whereas during accelerating inflation episodes, central bank independence has no influence on either the benefice ratio or the output gain.     

Budget deficits, monetization, and centralbank independence in developing countries

Using various indicators for central bank independence we examinethe relationship between central bank independence and governmentbudget deficits. Using a two-stage procedure we also analyzewhether central bank independence affects the monetization ofdeficits. First, the monetization relation in each country isestimated and then the resulting accommodation coefficientsare related to central bank independence. We conclude that onlyif the turnover rate of central bank governors or the politicalvulnerability mdex is used monetary accommodation of deficitsis negatively related to central bank independence. There isno relationship between independence and the level of budgetdeficits     

An Empirical Observation on Central Bank Independence and Real Output

This note reviews the relation between central bank independence and real output for the 1970s and 1980s. A new statistic, based on the total amount of real output available in a decade, is proposed in order to broaden the analysis of the impact of central bank independence on real output. The results show that, although there is no correlation between central bank independence and average growth, central bank independence had a significantly negative impact on the sum of real output during the 1980s. For the 1970s, central bank independence had no influence on the total quantity of real output.     

Trade Openness, Capital Mobility, and the Sacrifice Ratio

This paper develops and evaluates empirically the implications of a theoretical model of an open economy in which variations in both trade openness and capital mobility can influence the sacrifice ratio. Key predictions forthcoming from the model are that both forms of globalization can independently affect the sacrifice ratio, once the influences of the level of central bank independence and the degree of wage stickiness in nations’ economies are taken into account. Examination of cross-country data encompassing 58 disinflations for 16 countries yields evidence consistent with these essential predictions of the theoretical framework.     

Central Bank Independence,Wage Bargaining,and Labor Market Performance: New Evidence

Using data on 20 industrial countries over the period 1982 to 2003, this article finds central bank independence to favorably affect both unemployment and employment rates. The size of these effects appears to be substantial, particularly in the long term. In contrast to some of the previous literature, the article finds that the favorable effects of central bank independence do not depend on the degree of wage bargaining centralization or coordination. Furthermore, it finds that higher centralization as well as higher coordination of wage bargaining may also have favorable direct effects on labor market performance.     

CENTRAL BANK INDEPENDENCE, WAGE-BARGAINING STRUCTURE, AND MACROECONOMIC PERFORMANCE IN OECD COUNTRIES

The impact of central bank independence and wage-bargainingstructure on inflation and unemployment is explored theoreticallyand tested empirically for a sample of 17 OECD countries overtwo separate periods. The results suggest that inflation islower in economies with greater central bank independence andthat the equilibrium unemployment rate depends on the structureof the labour market. Greater central bank independence doesnot appear to be associated with higher unemployment.     

Board characteristics and efficiency of value added by banks: Evidence from an emerging economy

This paper estimates the efficiency of value added by banks using their total resources (physical capital resources and intangible resources) and finds an association between board characteristics and efficiency of value added. The paper is grounded in the theory of resource and knowledge based view of the firm, and agency theory, and tries to establish links between these two theories. This study departs from existing literature of examining the effect of board characteristics on financial performance, corporate sustainability, and corporate environmental responsibility, and tries to understand the relationship between board characteristics and the efficiency of value added by banks through their resources. This is also the first study of its kind to study the relationship between board structure characteristics and value creation in Indian banks using the Value Added Intellectual Coefficient (VAIC) methodology. Using the data for 41 commercial banks in India from 2008 to 2017 and by employing Prais-Winsten Regression, this study finds that board meetings and CEO-Chairman duality significantly and positively influence the efficiency of value added by banks through their total resources and intellectual capital resources. At the same time, independence in the boards negatively influences the efficiency of value added through physical capital resources. Overall, the findings of the paper indicate that board governance influences bank performance measured in terms of efficiency of value added. Policymakers, regulators, and bank managers should frame appropriate policies to ensure more board meetings, and the presence of board duality.     

ARE AFRICAN CENTRAL BANKS SUFFICIENTLY INDEPENDENT FOR MONETARY CONVERGENCE?

Central bank independence (CBI) is currently a widely debated and topical issue commanding the centre point of many economical and political debates, filling the pages of many scholarly journals. Both central bank independence and accountability are currently regarded as necessary best practices for achieving price stability. The importance of CBI rests on the premise that inflation is primarily a monetary phenomenon, and that the cost of reducing inflation can be lowered by an independent central bank with credibility. Support for CBI also stems from the argument that the power to create money should generally be separated from the power to spend it. This is even more relevant for countries with weak political institutions. However, various studies (cited below) detected lower inflation in those countries where independence of their central banks is the strongest. Countries all over – including some on the African continent – have increased the independence of their central banks accordingly.     

Central bank independence--conceptual clarifications and interim assessment

It is argued that credibility problems in macroeconomics hardlyexist, and certainly do not motivate central bank independence.The Rogoff banker, and much work which follows should be interpretedas blueprints for good policy, not institutional reforms. Thereare likely to be significant but at present unquantified costsassociated with central bank independence once the interactionof monetary and other policymakers is recognised. The evidencethat central bank independence reduces inflation or brings otherbenefits is questioned     

Fiscal-monetary Interactions: The Effect of Fiscal Restraint and Public Monitoring on Central Bank Credibility

This paper offers new insights into the interactions between private agents, the government, and a central bank, and their effect on the outcomes of monetary policy. In a simple game theoretic model we show that, unless there is public monitoring, impatient governments will be tempted to override or outmaneuver the central bank and create surprise inflation to boost output. This both undermines the government’s reputation for sound fiscal policies and reduces the central bank’s credibility. The result is not only higher and more volatile inflation but also sub-optimal output. More importantly, it is also shown that this is likely to occur even if the central banker is fully independent and the government is always patient. In contrast, if the public monitors sufficiently carefully, the central bank is never overridden and monetary policy can be credible even under an impatient government. We derive the general conditions under which each scenario occurs and then relate them to the developments in central banking over the past two decades, most notably to the trends towards greater independence, explicit inflation targeting, clearer communication and transparency. Interestingly, transparency is shown to reduce the variability of both inflation and output (by reducing the monitoring cost and making public monitoring more likely) which is in contrast to the usual transparency literature with a single policymaker which supposes a transparency-volatility trade-off.

The trade off between central bank independence and conservativeness

This paper introduces a parameter for central bank independencein a monetary policy game with a conservative central bankerIt tries to explain the optimal degree of central bank independenceand conservativeness by four economic and political determinants,both theoretically and empirically There appears to be a tradeoff between central bank independence and conservativeness.Then, by comparing the optimal degree of conservativeness andindependence with the actual degree of independence, we wantto identify the optimal degree of conservativeness for 12 memberstates of the European Union.     

经济政策变化是否影响了银行资产证券化发展?——基于经济政策不确定性的视角

以经济政策不确定性为主要特征的经济政策频繁变化将对银行产生不利冲击,并通过银行行为的变化推动资产证券化发展。文章以2011-2018年中国银行业数据为研究样本,基于经济政策不确定性对经济政策频繁变化进行衡量,充分识别经济政策不确定性与银行资产证券化发展的内在关系,以及相应的异质性特征。结果表明：（1）经济政策不确定性越大,银行发展资产证券化的动机越强;（2）影响机制检验发现,银行期限错配、风险承担及盈利水平的不利变化,是经济政策不确定性影响银行资产证券化发展的中介效应;（3）经济政策不确定性对银行资产证券化发展的促进作用,在非上市银行、城商行及农商行中更为显著。文章认为,鉴于银行发展资产证券化的目的在于应对外部环境及其对自身微观行为的不利冲击,监管部门应针对资产证券化的功能定位监管措施,并且尽量营造透明公平的环境,稳定银行机构对未来政策的预期,同时中小银行也要积极推动经营转型,主动增强适应宏观经济环境的能力。文章从经济政策不确定性这一宏观视角出发,拓展了银行资产证券化的研究维度,基于银行微观结构的变化深化了对经济政策变化及不确定性影响效应的认知。     

Central bank independence: Only part of the inflation story

Summary Central bank independence: Only part of the inflation story The idea that countries with an independent central bank perform better on price stability is very popular and confirmed by studies investigating the issue empirically. Yet, using the Barro-Gordon model we show that the gains from a more independent central bank are not fixed. They are larger in countries with unstable governments, not committed to fixed exchange rates, and in countries were left-wing parties hold a strong position. The effect of increasing central bank independence is also shown to depend on the level of the natural unemployment rate and the slope of the short-term Phillips curve.We are grateful to Eric Pentecost and two referees of this journal for valuable comments on an earlier version of the paper. Any remaining errors are ours.     

Precommitment by central bank independence

The paper addresses the issue of central bank independence. The central argument is that government can precommit to the objective of price stability by providing a constitutional status of independence to the central bank. A sufficient set of institutional elements and the problem of incentive compatibility are discussed. It is argued that the solution is superior to a constitutional money rule as no rule can take adequately into account trend changes in output or velocity.     

Controlling inflation in transition economies: The relevance of central bank independence and the right nominal anchor

Controlling inflation is a central problem in transition economies. This paper asks under what conditions or even whether central bank independence helps in this task. The conclusion shows that merely imposing legal independence on the central bank may be ineffective or even counterproductive. It is necessary to make a monetary strategy and the responsibilities and restrictions of central bank policy transparent to the public. In addition, it is important that the right nominal anchor is selected—one that is, or is believed to be, effective and sustainable. Both monetary targeting and inflation targeting are assumed to be unsuitable for most transition countries. Instead, some kind of dynamic exchange rate targeting appears to be the most reasonable choice.     

Trade credit and financial crises in Kazakhstan

This paper studies the trade credit and delinquency behavior in Kazakhstan paying attention to the effects of two recent crises using a unique dataset of large firms and SMEs from the year 2009 to 2016. Our estimates suggest that the relationship between trade and bank credit is mainly substitutional except that it was complementary for large firms following the year 2014–5 crisis. This new piece of evidence on the non-uniform relationship between trade and bank credit during crisis might provide more insight into the mixed findings in the literature. We also discern that trade credit demand is more prevalent among capital-intensive firms. Kazakhstani firms pass along a sizeable portion of their delinquent receivable to their trade credit suppliers. The transmission of trade credit delinquency, additionally, is amplified during the year 2014–5 economic crisis but the year 2009 global financial crisis.     

银行监督提高了债务人的经营绩效吗?——来自房地产上市公司面板数据的实证检验

中国房地产企业的银行信贷依赖特征为探索银行监督与企业绩效之间的关系提供了良好的现实背景。论文以企业绩效作为公司治理效率的替代,基于银行监督与企业绩效的研究主线,深入分析了银行监督与企业绩效的关系。研究发现:银行监督对企业绩效产生了负面影响,国有房地产企业和银行的产权同源性特征是导致银行负债的杠杆治理效应被扭曲的重要原因;虽然银行负债的杠杆治理效应被扭曲,但是银行监督作为一种外部治理机制,其与内部治理机制之间存在交互效应,要么表现为替代关系,要么表现为互补关系。在中国当前的制度背景下,要发挥银行监督的功能,提高企业绩效,而且要解决中国银行出现的呆账和坏账问题,其根本出路就是要发挥杠杆治理的作用。