Informal central bank independence: An analysis for three European countries

David Cobham, Stefania Cosci, Fabrizio Mattesini

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    8 Citations (Scopus)

    Abstract

    Changes in formal and informal central bank independence (CBI) in France, Italy and the United Kingdom in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks (CBs), defined as the ability to pursue price stability regardless of the government's preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the CB, the existence of anti-inflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the CB. These broad trends help to explain some of the inflation experience of the 1980s and 1990s, which cannot be understood in terms of changes to formal CBI. © Journal compilation © 2008 Scottish Economic Society.

    Original languageEnglish
    Pages (from-to)251-280
    Number of pages30
    JournalScottish Journal of Political Economy
    Volume55
    Issue number3
    DOIs
    Publication statusPublished - Jul 2008

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