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Central Bank Independence, Disinflations and Monetary Policy

Published online by Cambridge University Press:  20 January 2017

Ian Down
Ian Down*
Affiliation:
University of Tennessee, Knoxville
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Abstract

Analyses of central bank independence (CBI) have generated two sets of apparently contradictory results - CBI appears to be both inversely related to inflation and positively related to the rise in unemployment and slowdown in economic growth during disinflations. I suggest that these results may issue from autonomous central banks being associated with sharper, more aggressive disinflations. To test the proposition I use two measures of policy stance, one of which contains more information concerning policymaker's expectations than has heretofore been the case. The results suggest a need to qualify yet further the optimality of CBI.

Keywords

central bank independencemonetary policy
Type
Article
Information
Business and Politics , Volume 10 , Issue 3 , December 2008 , pp. 1 - 20
Copyright
Copyright © V.K. Aggarwal 2008 and published under exclusive license to Cambridge University Press 

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