Why are price stability and statutory independence of central banks negatively correlated? The role of culture

This paper investigates whether in OECD countries the negative relation between central bank independence and inflation is related to culture, in the sense of common values and norms. It appears that inflation is lower in countries where people dislike uncertainty. Countries, where inhabitants perceive that there should be an order of inequality and a centralisation of authority, are characterised by a dependent central bank and, to a lesser extent by relatively high inflation rates. Hence, the national attitude towards inequality among people appears to be a third factor explaining the negative correlation between inflation and the degree of central bank independence.