The correlation between central bank independence and inflation in developed and emerging countries

摘要

A number of authors have developed varied indices for measuring central bank independence with the aim of determining whether there is any association between central bank independence and inflation rates. Most analyses focused on industrialized countries, although more recently the interest has shifted to the emerging and less developed countries. The general trust of the results of these studies is that, when the sample includes only industrialized countries and using legal indices of central bank independence, there is an inverse correlation between central bank independence and inflation, while for developing and emerging countries, using actual indices of central bank independence, the results have shown a positive correlation or a less significant relationship between central bank independence and inflation. In this article we provide an empirical analysis of central bank independence, providing a new index of central bank independence and inflation targeting based on three pillars: political and legal central bank independence, central bank governance and conduct of monetary policy, central bank transparency and accountability. Moreover, based on this new index we provide an empirical model in order to establish the correlation between central bank independence and inflation rates in developed and emerging countries.