Central Bank Independence and Growth : A Reasonable Extreme-Bounds Analysis

This paper presents a reasonable extreme-bounds analysis of the empirical relationship between growth and central bank independence. The paper constructs the reasonable extreme-bounds for a wide variety of the most comprehensive, systematic measures of central bank independence currently available; uses the bootstrap technique to estimate the standard errors of the reasonable extreme-bounds; and computes both Type A and Type B fragility indices. The reasonable extreme-bounds, their standard errors and the fragility indices imply that the empirical relationships between growth and various proxies for central bank independence are too fragile to provide any compelling evidence in favor of the Cukierman-Kalaitziadakis-Summers-Webb finding that central bank independence fosters growth