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Central bank independence and its relationship to inflation

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Author: Mendonça, Helder Ferreira de UN symbol.: LC/G.2287-P p. 167-183 December 2005


This paper builds on earlier studies of central bank independence
(CBI);, making a comparison of the rankings of central banks for 15 countries
through three different indices. The analysis reveals that there is no shared
concept of CBI and that the indices are a measure of the inflation bias. The
Brazilian case is used as an example, with the objective of examining the
impact on inflation of an increase in independence over time, as measured
by Cukierman's index. The findings indicate that CBI is a consequence of
the conduct of monetary policy and that it is not an adequate framework
for developing credibility.

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CEPAL Review no.87


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