1. Is full (i.e. instrument and goal) central bank independence
... the power of academic ideas whose time has arrived" (Capie et al 1994). To decide whether CBI should be full or partial one needs to look at empirical evidence and studies conducted showing both cases for and against full or partial independence. The increased independence of central banks is given so that the monetary policy credibility (reputation) is increased. The importance of credibility ... an independent bank may not be immune from political pressures and thus exhibit inflationary bias. One of the first empirical studies conducted on this matter by Bade and Parkin (1995) used data...
- Word Count: 4086
- Approx Pages: 16
- Grade Level: Undergraduate