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Central bank independence and disinflationary credibility: a missing link?
Granting central banks independence is widely assumed to decrease inflation by increasing the credibility of commitments to price stability. This paper analyzes public- and private-sector behavior in a sample of 17 OECD countries for evidence of variations in disinflationary credibility with monetar...
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| Published in: | Oxford economic papers 1998-07, Vol.50 (3), p.335-359 |
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| Format: | Article |
| Language: | English |
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| cited_by | cdi_FETCH-LOGICAL-c595t-15299679b1efdd2e748d4f2694fa4143e3ebf7abe6131adc3b3bf39cb19b11993 |
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| container_end_page | 359 |
| container_issue | 3 |
| container_start_page | 335 |
| container_title | Oxford economic papers |
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| creator | Posen, Adam |
| description | Granting central banks independence is widely assumed to decrease inflation by increasing the credibility of commitments to price stability. This paper analyzes public- and private-sector behavior in a sample of 17 OECD countries for evidence of variations in disinflationary credibility with monetary institutions. The paper does not find evidence that the costs of disinflation are lower in countries with independent central banks. It also finds no evidence that independence inhibits collection of seignorage revenues or electoral manipulation of policy. These results raise questions about some explanations of the negative correlation between central bank independence and inflation. |
| doi_str_mv | 10.1093/oxfordjournals.oep.a028650 |
| format | article |
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| identifier | ISSN: 0030-7653 |
| ispartof | Oxford economic papers, 1998-07, Vol.50 (3), p.335-359 |
| issn | 0030-7653 1464-3812 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_38626243 |
| source | International Bibliography of the Social Sciences (IBSS); JSTOR-E-Journals; Oxford Journals Online |
| subjects | Analysis Central bank independence Central banks Coefficients Credibility Disinflation Economic aspects Economic policy Government Independence Inflation Inflation (Finance) Inflation controls Inflation rate Inflation rates Monetary policy Nominal rigidities Nominal wages OECD Politics Price control Price stability Private sector Public sector Statistical analysis Studies |
| title | Central bank independence and disinflationary credibility: a missing link? |
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