Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence
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This paper seeks to explain the pattern of central bank independence prior to the recent fashion for its adoption. The sources of central bank independence matter for economic outcomes because it is by no means clear that such independence is self-enforcing. Since central bankers know that exercise of their independence can be curtailed, they will only pursue counterinflationary policies consistently when there exists an interest group that can protect them politically from the costs of doing so. This paper argues that the financial sector is the most prominent such group, and that central bank independence-and inflation-varied across countries from 1950 to 1989 according to national differences in effective financial opposition to inflation. The results of this analysis have two major policy implications: (1) moves to central bank independence in countries where appropriate political support does not exist may not reduce inflation over the long term; (2) financial deregulation will affect inflation levels in previously unrecognized ways.
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INFLATION AND CENTRAL BANK INDEPENDENCE: A META-REGRESSION ANALYSIS
Klomp, J., & De Haan, J. (2010) · Journal of Economic Surveys · doi:10.1111/j.1467-6419.2009.00597.x · Cited by 209 · see citing works
Does central bank independence really matter?
Haan, J. D., & Kooi, W. J. (2000) · Journal of Banking & Finance · doi:10.1016/s0378-4266(99)00084-9 · Cited by 176 · see citing works
- Authors
- Posen, A. S.
- Corresponding author
- Posen, Adam S.
- ORCID
- Posen, Adam S.
- Venue
- NBER Macroeconomics Annual
- Publisher
- University of Chicago Press
- Published
- 1995-01
- Volume
- 10
- Pages
- 253-274
- ISSN
- 0889-3365 (ISSN-L)
- 1537-2642
- OpenAlex
- W2046200103
- Cited by
- 336
- References
- 1
- Citations by year
- 2026: 6 · 2025: 4 · 2024: 4 · 2023: 7 · 2022: 9 · 2021: 9 · 2020: 9 · 2019: 14 · 2018: 14 · 2017: 11 · 2016: 12 · 2015: 10 · 2014: 12 · 2013: 10 · 2012: 14
- FWCI
- 18.10
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- NBER Macroeconomics Annual (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Social Sciences › Economics, Econometrics and Finance › Finance › Global Financial Crisis and Policies
- Keywords
- central bank independence, financial services, inflation, financial deregulation, interest groups
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