In economically volatile conditions in which it is more difficult for the public to distinguish inflation deliberately generated by government from inflation created by unanticipated economic shocks, the anti-inflationary effect of central bank independence will be unchanged but the...

March 2000 - Does delegation of policymaking authority to independent agencies improve policy outcomes? This paper reports new theory and tests related to delegation of monetary policy to an independent central bank. The authors find that delegation reduces inflation only under specific...

The authors develop and test several new hypotheses about the anti-inflationary effect of central bank independence and exchange rate pegs in the context of different institutions and different degrees of citizen information about government policies. Theory provides strong reason to believe...