SFB 303 Discussion Paper No. B - 352

Author: Neumann, Manfred J.M.
Title: Problems in Measuring Central Bank Independence
Abstract: It is worthwhile trying to develop an indicator of actual central bank independence. A first attempt was made by Cukierman (1992) who used the turnover rate of central bank governors as an approximation. In section III we will try a different approach towards measuring the actual dependence of central banks. An indicator will be derived from a model of optimal monetary policy where the degree of central bank independence is determined by the weight the central banker attaches to the governmentīs objective function which is treated as an input to the central bankerīs objective function.
Keywords: Central bank independence, central bank indicators
Creation-Date: January 1996
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