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Year 2018, Volume: 1 Issue: 1, 46 - 65, 21.12.2018

Abstract

References

  • 1. Anastasiou, A.(2009), Central Bank Independence and Economic Performance, Cyprus Economic Policy Review, 2009, vol. 3, issue 1.
  • 2. Andries, A., Podpiera, A. (2018) Central bank independence and Systemic risk contribution, NBR Seminar.
  • 3. Arnone, M., Laurens, B., Segalotto, J.F.(2006), Measures of Central Bank Autonomy: Empirical Evidence for OECD, Developing, and Emerging Market Economies, IMF Working Paper, WP/06/228.
  • 4. Barro, R., Gordon, D. (1983) Rules, Discretion and Reputation in a Model of Monetary Policy, Working Paper nr. 1079, Cambridge.
  • 5. Bordo, M. (2007), A brief history of Central Banks, Federal Reserve Bank of Cleveland.
  • 6. Cargill, Th., O’Driscoll, G. Jr. (2012), Measuring Central Bank Independence, Policy Implications, and Federal Reserve Independence.
  • 7. Chrigui, Z., Boujelbene, Y., Mhamdi, G. (2011), Central Bank independence and inflation: Evidence from emerging countries.
  • 8. Crowe, C., and Meade, E.E. (2007), ‘The evolution of central bank governance around the world’, Journal of Economic Perspectives, 21(4).9. Cukierman, A., Webb, S.B., Neyapti, B. (1992), Measuring the Independence of Central Banks and its Effect on Policy Outcomes, World Bank Economic Review, 6(3).
  • 10. Cukierman, A. (2008), Central bank independence and monetary policymaking institutions — Past, present and future, European Journal of Political Economy, 24(4).
  • 11. De Haan, J., Eijjfinger, S. (2016), The politics of central bank independence, DNB Working Paper, No.539.
  • 12. Doroftei, I., Păun, C. (2013), Monetary Policy and Central Bank Independence in a Former Communist Country; Curious Evolutions in Romania, Journal of Eastern Europe Research in Business and Economics, Vol. 2013, DOI: 10.5171/2013.165597.
  • 13. Dumiter, F.(2011), Estimating the Impact of Central Bank Independence upon Macroeconomic Performance Using a Panel Data Model, Romanian Journal of Economic Forecasting, Issue 4.
  • 14. Dvorsky, S. (2000), Measuring Central Bank Independence in Selected Transition Countries and the Disinflation Process, BOFIT Discussion papers, No.13.
  • 15. Enser-Jedenstik, L. (2013), Party politics and the survival of central bank governors, European Journal of Political Research, 53(3), https://doi.org/10.1111/1475-6765.12045.
  • 16. Garriga, A. C. (2016), Central Bank Independence in the World: A New Data Set, International Interactions 42 (5).
  • 17. Grilli, V., D. Masciandaro, Tabellini, G.(1991), Political and Monetary Institutions, and Public Finance Policies in the Industrial Countries, Economic Policy, Issue 13
  • 18. Mangano, G. (1998), Measuring Central Bank Independence: a Tale of Subjectivity and of its Consequences, Oxford Economic Papers, 50(3).
  • 19. Rolnick A.J., Weber W.E. (2010) Free Banking Era. In: Durlauf S.N., Blume L.E. Monetary Economics. The New Palgrave Economics Collection. Palgrave Macmillan, London.
  • 20. *** European Central Bank Convergence Report, June 2016, https://www.ecb.europa.eu/pub/pdf/conrep/cr201606.en.pdf?a91977931874a7c6c63d80305b651394.
  • 21. *** http://www.bnro.ro/Central-bank-independence-14092.aspx.
  • 22. *** http://www.imf.org/external/datamapper/datasets.

Central bank independence and its impact on the macroeconomic performance. Evidence from Romania before and after crisis

Year 2018, Volume: 1 Issue: 1, 46 - 65, 21.12.2018

Abstract

This paper  aims to approach an overheated topic in the
context of dynamic economies and modern democracies, namely the central bank
independence related to the adopted monetary policy strategy, as well as their
impact on the good functioning of the economy. The independence of the central
bank (CBI) is a pillar for the effectiveness of the monetary policy, providing
the premise of a credible and depolitised institution. To put it differently, a
high level of CBI may be linked to a smaller level of corruption and political
interference; therefore, the central bank has an appropriate margin of
manoeuvre, which increases financial stability. The central bank independence
has been measured under various forms after signing the Maastricht Treaty in
1992, but the initiators are Cukierman and GMT, who provided the fundamental
indices. Measuring the central bank autonomy both legally (de jure) and
informally (de facto)  represents a
complex endeavour in a dynamic and volatile socio-economic context. This
paper’s objective is to calculate CBI starting from the CUK and GMT indices,
but also to empirically approach the relationship between CBI and macroeconomic
performance, namely price stability and output (GDP). Hence, the study starts
from the hypothesis of a correlation between the GDP and CBI, on the one hand,
and between inflation and CBI, on the other hand. Numerous studies have shown
an insignificant positive correlation between independence and GDP, and also
the fact that a negative correlation between inflation and CBI is not generally
valid. Accordingly, this paper aims to demonstrate whether CBI is a viable
determinant of growth and inflation volatility. The analyzed time series
encompass the 2007-2016 period of time  and the subject of the research is the
National Bank of Romania, whose credibility in the postcrisis era is high, due
to the lack of bank failures and to the general stability and soundness of the
banking system.

References

  • 1. Anastasiou, A.(2009), Central Bank Independence and Economic Performance, Cyprus Economic Policy Review, 2009, vol. 3, issue 1.
  • 2. Andries, A., Podpiera, A. (2018) Central bank independence and Systemic risk contribution, NBR Seminar.
  • 3. Arnone, M., Laurens, B., Segalotto, J.F.(2006), Measures of Central Bank Autonomy: Empirical Evidence for OECD, Developing, and Emerging Market Economies, IMF Working Paper, WP/06/228.
  • 4. Barro, R., Gordon, D. (1983) Rules, Discretion and Reputation in a Model of Monetary Policy, Working Paper nr. 1079, Cambridge.
  • 5. Bordo, M. (2007), A brief history of Central Banks, Federal Reserve Bank of Cleveland.
  • 6. Cargill, Th., O’Driscoll, G. Jr. (2012), Measuring Central Bank Independence, Policy Implications, and Federal Reserve Independence.
  • 7. Chrigui, Z., Boujelbene, Y., Mhamdi, G. (2011), Central Bank independence and inflation: Evidence from emerging countries.
  • 8. Crowe, C., and Meade, E.E. (2007), ‘The evolution of central bank governance around the world’, Journal of Economic Perspectives, 21(4).9. Cukierman, A., Webb, S.B., Neyapti, B. (1992), Measuring the Independence of Central Banks and its Effect on Policy Outcomes, World Bank Economic Review, 6(3).
  • 10. Cukierman, A. (2008), Central bank independence and monetary policymaking institutions — Past, present and future, European Journal of Political Economy, 24(4).
  • 11. De Haan, J., Eijjfinger, S. (2016), The politics of central bank independence, DNB Working Paper, No.539.
  • 12. Doroftei, I., Păun, C. (2013), Monetary Policy and Central Bank Independence in a Former Communist Country; Curious Evolutions in Romania, Journal of Eastern Europe Research in Business and Economics, Vol. 2013, DOI: 10.5171/2013.165597.
  • 13. Dumiter, F.(2011), Estimating the Impact of Central Bank Independence upon Macroeconomic Performance Using a Panel Data Model, Romanian Journal of Economic Forecasting, Issue 4.
  • 14. Dvorsky, S. (2000), Measuring Central Bank Independence in Selected Transition Countries and the Disinflation Process, BOFIT Discussion papers, No.13.
  • 15. Enser-Jedenstik, L. (2013), Party politics and the survival of central bank governors, European Journal of Political Research, 53(3), https://doi.org/10.1111/1475-6765.12045.
  • 16. Garriga, A. C. (2016), Central Bank Independence in the World: A New Data Set, International Interactions 42 (5).
  • 17. Grilli, V., D. Masciandaro, Tabellini, G.(1991), Political and Monetary Institutions, and Public Finance Policies in the Industrial Countries, Economic Policy, Issue 13
  • 18. Mangano, G. (1998), Measuring Central Bank Independence: a Tale of Subjectivity and of its Consequences, Oxford Economic Papers, 50(3).
  • 19. Rolnick A.J., Weber W.E. (2010) Free Banking Era. In: Durlauf S.N., Blume L.E. Monetary Economics. The New Palgrave Economics Collection. Palgrave Macmillan, London.
  • 20. *** European Central Bank Convergence Report, June 2016, https://www.ecb.europa.eu/pub/pdf/conrep/cr201606.en.pdf?a91977931874a7c6c63d80305b651394.
  • 21. *** http://www.bnro.ro/Central-bank-independence-14092.aspx.
  • 22. *** http://www.imf.org/external/datamapper/datasets.
There are 21 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

İrina - Raluca Badea

Publication Date December 21, 2018
Submission Date September 17, 2018
Acceptance Date November 13, 2018
Published in Issue Year 2018 Volume: 1 Issue: 1

Cite

APA Badea, İ. .-. R. (2018). Central bank independence and its impact on the macroeconomic performance. Evidence from Romania before and after crisis. InTraders International Trade Academic Journal, 1(1), 46-65.