This paper argues that fixed exchange rate regimes are preferred by the international sector only if they are adopted in economies endowed with anti-inflationary policy-making institutions (i.e., independent central banks). Cross-national firm-level data gives strong support to this claim.

Im Juni 2013 fand in Karlsruhe die mündliche Verhandlung im Hauptsacheverfahren Europäischer Stabilitätsmechanismus/Europäische Zentralbank statt. Dabei ging es im Kern um die Frage, ob das Outright-Monetary-Transactions-Programm der EZB mandatswidrig ist. Die ökonomische Logik, die zu dem...

The efficacy of central bank communications is inextricably linked to the characteristics of the monetary policy framework. Therefore, this paper presents a set of fundamental principles regarding the joint design of monetary policy strategy and communications. The practical implications of...

We study whether central bank independence (CBI) and monetary policy arrangements can jointly influence the likelihood of policymakers assigning banking supervision to central banks. Our empirical analysis shows that, assuming a benevolent government, a higher degree of central bank operational...

It has been argued that economies with more independent central banks experience lower inflation over time. In this paper we show that this relationship is sensitive to the methodology through which central bank independence indices are constructed. We stress the importance of employing dynamic...

It has long been held that central bank independence (CBI) from political control is a necessary requirement to curb inflation. In recent times, however, this long held belief has been challenged. Using a recently compiled panel data set on central bank independence measures, the proposition...

This paper examines the effects of inflation targeting on inflation in both advanced and emerging economies. We do not detect significant effects in advanced economies and only find small benefits in emerging economies, in line with previous studies. However, when we differentiate the impact of...

We study monetary policy-making in an economy with many sector-specific monopoly unions. It is assumed that the senior union members are in the majority and – due to the practice of lay-offs by inverse seniority – face a lower unemployment risk than the junior members. Consequently, the...

This paper examines whether government ideology has influenced monetary policy in OECD countries. We use quarterly data in the 1980.1–2005.4 period and exclude EMU countries. Our Taylor-rule specification focuses on the interactions of a new time-variant index of central bank independence with...