Inflation Performance and Constitutional Central Bank Independence: Evidence From Latin America and the Caribbean

March 1, 2003

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Eva Gutierrez. Inflation Performance and Constitutional Central Bank Independence: Evidence From Latin America and the Caribbean, (USA: International Monetary Fund, 2003) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores the relationship between the constitutional entrenchment of central bank independence and inflation performance. Empirical studies for developing countries have not found a relationship between central bank independence, proxied by the "de jure" independence established in the central bank law, and inflation. We argue that the constitution is likely to be better enforced than ordinary statutes owing to its higher legal rank. Our empirical analysis finds that in a sample of Latin American and Caribbean countries, those countries that entrench the independence of the central bank in the constitution have a better inflation performance.

Subject: Banking, Central bank accountability, Central bank autonomy, Central bank legislation, Central bank mandate, Central banks, Inflation, Price stabilization, Prices

Keywords: Caribbean, Central bank, Central bank authorities, Central bank autonomy, Central bank independence, Central bank law provision, Central bank legislation, Central bank legislation reform, Central bank mandate, Country, Exchange rate, Government, Government time-inconsistency problem, Independence, Inflation, Inflation performance, Latin American countries, Price stabilization, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/053
Stock No:

WPIEA0532003
ISBN:

9781451847406
ISSN:

1018-5941

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