1. Is full (i.e. instrument and goal) central bank independence
... stability objective. CBI makes a monetary policy directed towards low levels of inflation more credible. Indeed, there is quite some evidence for a negative relationship between CBI and inflation (Eijffinger and De Haan (1996)). A general belief amongst many economists is that CBI stems from the thought that if a central bank were independent from its enforced political obligations then it would deliver lower ... as they would not be subject to each governments" discretion. A central bank with independence would furthermore lead to a lower level of inflation. For the case in favour of co...
- Word Count: 4086
- Approx Pages: 16
- Grade Level: Undergraduate