Central bank independence, inflation and economic performance

Abstract

The paper deals with the issue of central bank independence, which has become the topic of many debates in the last years. Central bank independence is considered one of the determinants of the inflation, as empirical studies have found a negative correlation between central bank independence a and inflation rates in developed countries, while in emerging market economies an important determinant of inflation rates seems to be the turnover rate of central bank governors. Appreciation of the independence of central bank often has a formal character, with focus on its relationship with the government. In spite of the fact that legal independence does not always fully translate into actual independence, it is nonetheless associated with significantly lower inflation. This paper proposes to overview the literature on central bank independence and its correlations with inflation and economic performance.cetranl bank, independence, price stability, accountability