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The Case for Central Bank Independence

Author

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  • Jakob De Haan
  • Jan Egbert Sturm
Abstract
This paper reviews arguments for central bank independence and presents new evidence on the impact of central bank (in)dependence on the level and variability of inflation, money growth, the level and financing of government budget deficits and economic growth, using three different measures of central bank independence. There are indications that countries with an independent central bank experience a lower and more stable inflation rate than countries with a central bank which comes under direct political control. Moreover, central bank credit to government and government budget deficits are lower, while economic growth is not directly affected by central bank independence.

Suggested Citation

  • Jakob De Haan & Jan Egbert Sturm, 1992. "The Case for Central Bank Independence," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 45(182), pages 305-327.
    • Handle: RePEc:psl:bnlaqr:1992:33
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10634/10518
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    More about this item

    Keywords

    Money; central bank independence;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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