Working Paper: CEPR ID: DP2353
Authors: Helge Berger; Jakob de Haan; Sylvester C. W. Eijffinger
Abstract: This paper reviews recent research on central bank independence (CBI). After we have distinguished between independence and conservativeness, the literature on optimal inflation contracts is discussed, followed by research in which the inflationary bias is endogenized. Finally, the various challenges that have been raised against previous empirical findings on CBI are reviewed. We conclude that the negative relationship between CBI and inflation is quite robust.
Keywords: central bank independence; conservativeness; optimal inflation contracts; inflation targeting
JEL Codes: D72; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Legislative Environment and Wage Bargaining Structure (J38) | Central Bank Independence (CBI) and Inflation (E58) |
| Central Bank Independence (CBI) (E58) | Inflation (E31) |
| Conservativeness of Central Bank (E58) | Inflation (E31) |
| Central Bank Independence (CBI) and Conservativeness (E58) | Inflation (E31) |
| Central Bank Independence (CBI) and Same Inflation Aversion as Government (E31) | Inflation (E31) |