Monetary and Economic Studies Vol.14, No.2 / December 1996

Central Bank Independence Indexes in Economic Analysis: A Reappraisal

Hiroshi Fujiki

The paper, by means of panel data analysis, reexamines the empirical regularities strongly advocated by Alesina and Summers (1993), i.e., that (1) central bank independence and inflation are negatively correlated in industrialized countries; and that (2) central bank independence and real growth are not correlated in industrialized countries. The analysis here shows that both regularities become unstable when stricter conditions are imposed, and have not proved to be robust. Therefore, one may conclude that Alesina and Summers' results have not yet provided a reliable basis for policy recommendations.

Keywords: Central bank independence indexes;Panel data;Cross-country comparison

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

Copyright © 1996 Bank of Japan All Rights Reserved.

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