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.     

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 and Sacrifice Ratios: Some Further Considerations

The existing literature reports a positive relationship between sacrifice ratios and central bank independence. This paper discusses two critical points related to the usual procedures employed by this literature. One concerns the issue of non-stationarity of the inflation rate, the other the problem of correlation between the error terms for different disinflation episodes in the same country. The way in which the sacrifice ratio-central bank independence relationship is tested is reconsidered taking into account these points. Our results shed considerable doubts on the nature and robustness of such a relationship and on the usual interpretation given to it in the literature.     

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 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.     

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.     

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.     

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.     

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.     

Fiscal and monetary policy in a monetary union: Credible inflation targets or monetized debt?

Fiscal and Monetary Policy in a Monetary Union: Credible Inflation Targets or Monetized Debt? —The paper examines the interrelationship between fiscal and monetary policy in a two-country monetary union. The worst scenario occurs when an independent central bank sets the nominal interest rate and responds to rising government debt/GDP ratios by monetization. The result is high inflation, high debt/GDP ratios and a large public sector. Government debt and inflation are contained if the governments bear sole responsibility for solvency, but the public sector remains excessively large. The best scenario occurs if the central bank removes the incentive for the governments to engineer surprise inflation by credible inflation targeting.     

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     

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.     

财政赤字货币化与美国金融危机的政治经济学分析

受由新冠疫情引发的经济衰退影响,美国启动了以增发国债和超级量化宽松为基础的数轮纾困政策,以央行购买国债推动经济复苏的财政赤字货币化政策自2008年后再一次引起了全球的注意.本文以美国为刺激经济复苏施行的财政政策和货币政策为出发点,从经济基础、理论基础、制度演变、财政赤字和国债规模变化等角度分析了财政赤字货币化的形成原因...     

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.     

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.     

美联储货币政策对中国货币政策的溢出效应研究

文章主要研究了美国货币政策对中国货币政策的溢出效应,理论部分分析了在开放经济条件下两国模型关于货币政策跨国传输等相关问题。货币供给分为国内供给和外部输入,通过中央银行资产负债表中资产负债的变化可以分析外部货币的输入影响到基础货币的被动投放,在流通过程中由于乘数效应影响了货币供给量。外部货币的输入影响央行调控独立性的发挥,外部货币的输入容易形成对国内货币市场和产品市场某种程度的冲击,央行货币政策调控的难度增加。经验分析发现,美元输入对中国货币政策存在溢出效应,影响到中国的基础货币投放,影响到中国的货币政策的独立性以及执行的效果。     

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.     

Free or central banking? Liquidity and financial deepening in Sweden, 1834-1913

During Sweden’s nineteenth-century modernization, Enskilda banks contributed to economic expansion and integration by providing generally accepted means of payment beyond what would have been possible for the central bank, the Riksbank. The Riksbank was constrained by specie-convertibility requirements for Sweden’s currency. Contrary to previous arguments, however, the Enskilda banks did not operate according to free banking theory. The Enskilda banks held Riksbank notes instead of specie as base-money reserves. This arrangement led to a higher supply of formal liquidity than what would have been the case with either a free banking system or a pure deposit-based commercial banking system. The consequence for Sweden was a rapid rate of monetization and financial deepening.     

Exchange Rates,Domestic Prices,and Central Bank Actions: Recent U.S. Experience

Central banks that are primarily concerned with the behavior of prices will use monetary policy to try to insulate prices from exchange rate changes. Prices then appear unresponsive to changes in the exchange rate. The observed relationships between prices and the exchange rate will reflect central bank actions instead of the underlying relationship between exchange rates and prices. This paper explicitly recognizes the role that policy plays in determining the observable relationships between exchange rates and prices, and in so doing, it illustrates how the underlying relationships can be unraveled. Using three different empirical approaches, we examine the recent experience of the United States. We find that the prices of various nondurable goods, and even of some services, respond modestly to the exchange rate, and we find that the responses emerge most clearly when the role of monetary policy is explicitly considered. These findings are consistent with the hypothesis that the Federal Reserve acts to mitigate the effects of exchange rate fluctuations on domestic prices.     

加强中央银行独立性的重要意义--以日本为实例的分析

以日本为实例的分析表明,如果一国的中央银行缺乏应有的独立性,一般说来并不会像“时间非一致性”理论所分析的那样,会促使政府反反复复地背弃维护物价稳定的承诺,去有意制造通货膨胀,也不会像政治商业周期理论所分析的那样,会引发政府为谋求连任而周期性地运用货币政策愚弄选民。部分西方学者以通货膨胀率的讷氏来分析是否应该加强中央银行独立性的观点是极其片面的。为了使货币政策选择免受个别政治家或某届政府不合理的干预,避免国际压力对货币政策运营产生错误影响,使货币政策真正起到稳定经济运行的作用,必须赋予中央银行以充分的独立性。