Investigating the Link Between Central Bank Independence and Inflation in Central and Eastern Europe

摘要

This paper investigates the relationship between central bank independence (CBI) and inflation by using two different CBI measures in seventeen transition economies from Central and Eastern Europe from 1990 to 2009. It employs a fixed effects panel data model, which incorporates several control variables and accounts for possible autocorrelation in the residuals. The main finding of our empirical research is that central bank independence is negatively associated with inflation, even after controlling for the effects of other macroeconomic and institutional variables, such as the overall progress of liberalization. These results are broadly in line with the previous empirical findings in the literature.