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Survey of Models and Indicators of Independence

  • Bernard J. Laurens
  • Marco Arnone
  • Jean-François Segalotto
Chapter
  • 72 Downloads
Part of the Procyclicality of Financial Systems in Asia book series (IMF)

Abstract

In the 1990s a consensus emerged in the economic literature that price stability should be the primary objective of monetary policy, and the CB should have sufficient independence as a means to attain this goal.1 These conclusions are based on a large body of literature that was developed starting in the late 1970s, and demonstrated that CB independence has undisputable benefits for macroeconomic performance. On average, countries with CBs enjoying significant independence were able to achieve lower average inflation, cushion the impact of political cycles on economic cycles, enhance financial stability, and boost fiscal discipline without any real additional costs or sacrifices in terms of output volatility or reduced economic growth.

Keywords

Monetary Policy OECD Country Real Interest Rate Price Stability Economic Independence 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© International Monetary Fund 2009

Authors and Affiliations

  • Bernard J. Laurens
    • 1
  • Marco Arnone
    • 2
    • 3
  • Jean-François Segalotto
    • 2
  1. 1.Monetary and Capital Markets DepartmentInternational Monetary FundUSA
  2. 2.The Centre for Macroeconomics & Finance Research (CeMaFiR)Italy
  3. 3.University of Eastern PiedmontItaly

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