Two Essays on Central Bank Independence Reforms

This thesis consists of two empirically oriented papers on Central Bank Independence (CBI) Reforms. Paper [1] is an investigation of why politicians around the world have chosen to give up power to independent central banks, thereby reducing their ability to control the economy. A new data-set covering 132 countries, of which 89 had implemented CBI reforms during 1980-2005, was collected. Politicians in non-OECD countries were more likely to delegate power to independent central banks if their country had been characterized by high variability in inflation and if they faced a high probability of being replaced. No such effects were found for OECD countries. Paper [2], using a difference-in-difference approach, studies whether CBI reform matters for inflation performance. The analysis is based on a dataset including the possible occurence of CBI reforms in 132 countries during the period 1980-2005. CBI reform is found to have contributed to bringing down inflation in high-inflation countries, but it seems unrelated to inflation performance in low-inflation countries.Monetary policy; institutional reform; central banking; price stability; political economy; delegation; institutional economics; inflation; time-inconsistency; accountability

Why Do Politicians Implement Central Bank Independence Reforms?

It is something of a puzzle that politicians around the world have chosen to give up power to independent central banks, thereby reducing their possibilities to fine-tune the economy. In this paper the determinants of central bank independence (CBI) reforms are studied using a new data set on the possible event of such reforms in 119 countries. According to the data, as much as 81 countries had implemented CBI-reforms during the study period. The results indicate, moreover, that policymakers are more likely to delegate power to independent central banks when the foreign debt is relatively high. In non-OECD countries, the likelihood of a CBI-reform also seems to increase when policymakers face a high probability of getting replaced.Institutional reforms; inflation; time-inconsistency; political stability; probit

Do Central Bank Independence Reforms Matter for In ‡ation Performance?

Abstract A di¤erence-in-di¤erence approach was used to investigate whether Central Bank Indepencence (CBI) reforms matter for in ‡ation, based on a novel data set including the possible occurence of such reforms in 132 countries during the period 1980-2003. CBI-reforms are found to have contributed to bringing down high in ‡ation rates where those existed, but they seem unrelated to performance in low-in ‡ation countries. JEL classi…cation: E52; E58

Determinants and Effects of Central Bank Independence Reforms

This thesis consists of four empirically oriented papers on central bank independence (CBI) reforms.    Paper [1] is an investigation of why politicians around the world have chosen to give up power to independent central banks, thereby reducing their ability to control the economy. A new data-set, including the possible occurrence of CBI-reforms in 132 countries during 1980-2005, was collected. Politicians in non-OECD countries were more likely to delegate power to independent central banks if their country had been characterized by high variability in inflation and if they faced a high probability of being replaced. No such effects were found for OECD countries.    Paper [2], using a difference-in-difference approach, studies whether CBI reform matters for inflation performance. The analysis is based on a dataset including the possible occurrence of CBI-reforms in 132 countries during the period of 1980-2005. CBI reform is found to have contributed to bringing down inflation in high-inflation countries, but it seems unrelated to inflation performance in low-inflation countries.    Paper [3] investigates whether CBI-reforms are important in reducing inflation and maintaining price stability, using a random-effects random-coefficients model to account for heterogeneity in the effects of CBI-reforms on inflation. CBI-reforms are found to have reduced inflation on average by 3.31 percent, but the effect is only present when countries with historically high inflation rates are included in the sample. Countries with more modest inflation rates have achieved low inflation without institutional reforms that grant central banks more independence, thus undermining the time-inconsistency theory case for CBI. There is furthermore no evidence that CBI-reforms have contributed to lower inflation variability    Paper [4] studies the relationship between CBI and a suggested trade-off between price variability and output variability using data on CBI-levels, and data the on implementation dates of CBI-reforms. The results question the existence of such a trade-off, but indicate that there may still be potential gains in stabilization policy from CBI-reforms

Do Central Bank Independence Reforms Matter for Inflation Performance?

A difference-in-difference approach was used to investigate whether Central Bank Indepencence (CBI) reforms matter for inflation, based on a novel data set including the possible occurence of such reforms in 132 countries during the period 1980-2003. CBI-reforms are found to have contributed to bringing down high inflation rates where those existed, but they seem unrelated to performance in low-inflation countries.Monetary policy; institutional reforms; central banking; price stability; political economy; delegation

An NS module for simulation of HSDPA

We have implemented functionality from the High Speed Downlink Packet Access (HSDPA) mode as an extension to ns-2 (the Network Simulator version 2). Ns-2 is a well-known simulation platform frequently used in network research. It includes detailed models of transport protocols, queueing strategies, etc. The code is open source, which is in line with the research ideal that results and methods should be made available both for validation of results and for further studies. We see a need for our simulator because mobile cellular systems are merging with the wired Internet creating an all-IP network. This surfaces problems related to TCP performance, Quality of Service, user behaviour to name a few. Modelling of high-speed cellular networks, from an Internet point of view, is therefore needed. When the current TCP/IP protocol suite was designed, assumptions were made about the delay and loss characteristics of the underlying links. The initial wireless IP networks suffered from problems in situations when the assumptions were not met and numerous solutions have been proposed. To answer questions related to the TCP/IP protocol suite our module is fitted with detailed models of TCP and factors which will have a significant impact on its performance. Our simulator is therefore a system-level simulator. It does not do exact modelling of the link layer. Instead models of the link layer that captures the behaviours essential to upper layers are used. We believe that the upper layers will have a greater impact on the problems we want to study than the lower layers. The purpose of this report is to describe the models used in our simulator. For better understanding of our models, we also include descriptions of the system modelled. This report is not a manual for performing simulations with our simulator. The work on this simulator was started by Ulf Bodin.Godkänd; 2006; 20061126 (ysko

"Innan såg man sig själv som en skitig knarkare helt enkelt"Berättelser om vägen in och ut ur missbruket med händelser, tankar och beslut om ett drogfritt liv.

The purpose of this essay was to try to understand wich situations and events influenced individuals in the process of both becoming a drug-addict and in the process becoming a person with a drug-free life. The framing of the questions we had were if it was possible to see a pattern and find similarities in the changing-process, what role did relationsships play and which turning-points was important during the process? We also wanted to know how life was described as a drug-addict and how it was described at the moment. The survey was based on thematised qualitative interviews and focused on the personal stories of the interviewees. We interwiewed two women and five men, all of which have had several years of drug-abuse behind them. They had all been undergoing severe change in their social life in a way that they never have expected for themselves. We found similarities and patterns and that relationships played a major role for the changing process. Important turning-points for escalation of the drug use was described and all the interwiewees described a special turningpoint that finally made them take the decision to change their lifes and become individuals with a normal socially accepted life

Averaging bias in firm acquisition processes

When a firm acquires 100% of the shares in another firm and finances this acquisition with available funds, the debt level and return on equity of the two firms in combination goes up (under certain conditions). In three experiments, we empirically demonstrate that individuals intuitively think these variables become lower after the acquisition, contrary to what is actually the case. The findings stress the role of psychological processes in business valuation and accounting and are consistent with an averaging account of judgment under uncertainty. On this view, people's judgments of objects in combination are biased toward the average rather than the sum of the objects’ individual characteristics. The experiments also show that informing the participants of the accurate evaluations removes the bias. The third experiment reinforced these results by replicating the same pattern with a sample of “high-accounting literacy” participants who all reported formal university training in accounting. One takeaway of the study is that, in acquisition settings, investors potentially could base their assessment of firm value on false premises which in turn (at least in the short run) leads to a higher level of asset mispricing and a less efficient capital market

Are central bank independence reforms necessary for achieving low and stable inflation?

Using data on the occurence of central bank independence (CBI) reforms in 131 countries during 1980-2005, we test whether they were important in reducing inflation and maintaining price stability. CBI reforms are found to have reduced inflation on average 3.31% when countries with historically high inflation rates are included. But countries with lower inflation have reduced it without institutional reforms granting central banks more independence, undermining the theoretical time-inconsistency case for CBI. There is furthermore no evidence that CBI reforms have helped reduce inflation variability