The empirical literature on central banking has found measures of central bank independence/conservatism to be negatively correlated with inflation and inflation variance across countries. But the cross-country approach has been criticised for its focus on policy outcomes instead of policies,...

The literature on central banking so far has provided explanations of why we observe independent central banks and why central banks are usually more conservative than governments. However, little is known about the interaction between the two institutions. Bridging the gap, we focus on the...