Cover IMF Working Papers
Any Link Between Legal Central Bank Independence and Inflation? Evidence from Latin America and the Caribbean
Author: Mr. Luis Ignacio Jácome and Mr. Francisco F. Vazquez
Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 075
Language:
English
Publication Date:
01 Apr 2005
DOI:
https://doi.org/10.5089/9781451860948.001
ISBN:
9781451860948
ISSN:
1018-5941
Pages:
41
Keywords:
WP; World inflation; reform country; inflation performance; least squares; inflation in the sampled country; structural reform
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper reviews central bank legislation in 24 countries in Latin America and the Caribbean during the 1990s. Using panel regressions, we find a negative relationship between legal central bank independence (CBI) and inflation. This result holds for three alternative measures of CBI and after controlling for international inflation, banking crises, and exchange regimes. The result is also robust to the inclusion of a broader indicator of structural reforms that usually go along with changes in central bank legislation, illustrating the complementary nature of various aspects of economic reform. The paper fails, however, to find a causal relationship running from CBI to inflation.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund