Does central bank independence lower inflation?

TY - JOUR

T1 - Does central bank independence lower inflation?

AU - Ismihan, M

AU - Ozkan, F G

PY - 2004/9

Y1 - 2004/9

N2 - This paper provides a potential explanation for the recent findings of no significant relationship between central bank independence (CBI) and lower inflation. We argue that although CBI delivers lower inflation in the short-term, it may reduce the scope for productivity enhancing public investment and so harm future growth potential. We also argue that the effects on growth make CBI less likely to achieve lower inflation in the long-term. (C) 2004 Elsevier B.V. All rights reserved.

AB - This paper provides a potential explanation for the recent findings of no significant relationship between central bank independence (CBI) and lower inflation. We argue that although CBI delivers lower inflation in the short-term, it may reduce the scope for productivity enhancing public investment and so harm future growth potential. We also argue that the effects on growth make CBI less likely to achieve lower inflation in the long-term. (C) 2004 Elsevier B.V. All rights reserved.

KW - central bank independence

KW - public investment

KW - inflation

U2 - 10.1016/j.econlet.2003.12.022

DO - 10.1016/j.econlet.2003.12.022

M3 - Article

SN - 0165-1765

VL - 84

SP - 305

EP - 309

JO - Economics Letters

JF - Economics Letters

IS - 3

ER -