Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26046 
Year of Publication: 
2007
Series/Report no.: 
CESifo Working Paper No. 2001
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Central bank independence (CBI) is a very important precondition for price stability. However, the empirical evidence for a correlation between both is relatively weak. In this paper, this weakness is countered with a) an extended measure of monetary commitment, which includes well-known criteria for CBI and external criteria such as convertibility and exchange rate regimes and b) the argument that monetary commitment can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment with data from four decades confirms the crucial role of monetary commitment for price stability.
JEL: 
E50
Document Type: 
Working Paper
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