The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence

By Bernard J Laurens, Marco Arnone, Jean-François Segalotto

October 1, 2006

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Bernard J Laurens, Marco Arnone, and Jean-François Segalotto. The Measurement of Central Bank Autonomy: Survey of Models, Indicators, and Empirical Evidence, (USA: International Monetary Fund, 2006) accessed November 23, 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 presents a survey of the literature on the measurement of central bank autonomy. We distinguish inputs that constitute the building blocks in the literature, and the literature that builds on them. Issues including sensitivity analysis, robustness, and endogeneity are discussed. The review shows that empirical evidence regarding the beneficial effects of central bank autonomy is substantial, although some technical issues still remain for further research. In particular, central bank autonomy raises the issue of subjecting the monetary authorities to democratic control; this calls for additional research on the linkages between central bank autonomy and accountability and transparency. Additional empirical analysis on the relationship between the financial strength of the central bank and its de facto autonomy, and between its autonomy and financial stability, would also be desirable.

Subject: Government debt management, Inflation, Labor, Legal support in revenue administration, Price stabilization, Prices, Public financial management (PFM), Revenue administration, Wage bargaining

Keywords: Autonomy index, Autonomy measure, Baltics, CB autonomy, CB autonomy measure, CB conservativeness, CB credibility, CB independence, Central bank, Central bank autonomy, Credit demand, De jure CB autonomy, Debt monetization, Economic autonomy, Exchange rate, Global, Government debt management, Inflation, Inflation performance, Legal support in revenue administration, Negative correlation, OECD country, Political autonomy, Price stabilization, Sub-Saharan Africa, Turnover rate, Wage bargaining, WP

Publication Details

Pages:

83
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/227
Stock No:

WPIEA2006227
ISBN:

9781451864878
ISSN:

1018-5941

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