Lin, Hsin-Yi (2009): A Revisit of the Relation between Central Bank Independence and Inflation. Published in: The Empirical Economics Letters , Vol. 9, No. 2 (February 2010): pp. 139-143.
Download (99kB) | Preview
Conventional wisdom argues that the relation between central bank independence (CBI) and inflation is negative. However, empirical studies based upon regressing inflation rates on CBI tend to reject this hypothesis and show that there is no negative relationship. This article investigates the effect of CBI on inflation by quantile regression. The empirical result shows that the relation could be negative or positive for different quantiles of inflation. Quantile regression provides a method for investigating the relation completely between CBI and inflation.
|Item Type:||MPRA Paper|
|Original Title:||A Revisit of the Relation between Central Bank Independence and Inflation|
|Keywords:||Central Bank Independence; Inflation; Quantile Regression.|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies|
|Depositing User:||Hsin-Yi Lin|
|Date Deposited:||28. Apr 2011 17:51|
|Last Modified:||30. Dec 2015 23:15|
Alesina, A. and L. Summers, 1993, Central bank independence and macroeconomic performance: some comparative evidence, Journal of Money, Credit, and Banking, 25, 151-162.
Brumm, H., 2000, Inflation and central bank independence: conventional wisdom redux, Journal of Money, Credit and Banking, 32, 807-819.
________, 2002, Inflation and central bank independence revisited, Economics Letters, 77, 205-209.
________, 2006, The effect of central bank independence on inflation in developing countries, Economics Letters, 90, 189-193.
Campillo, M. and J. Miron, 1997, Why does inflation differ across countries? In: Reducing Inflation, C. Romer and D. Rome reds, University of Chicago, Chicago, 335-357.
Cukierman, A., 1992, Central Bank Strategy, Credibility, and Independence: Theory and Evidence, MIT Press.
Grilli, V., D. Masciandaro, and G. Tabellini, 1991, Political and monetary institutions and public finance policies in the industrial countries, Economic Policy, 13, 341-392.
King, D. and Y. Ma, 2001, Fiscal decentralization, central bank independence, and inflation, Economics Letters, 72, 95-98.
Koenker, R. and G. Bassett, 1978, Regression quantile, Econometrica, 46, 33-50.
Temple, J., 1998, Central bank independence and inflation: good news and bad news, Economics Letters, 61, 215-219.