This paper presents an interest group theory of central bank independence. The theory is grounded in the concept of … unanticipated burst of inflation that unravels many interest group deals. The interest groups then have to return to the politicians …, while politicians can benefit from creating unanticipated inflation, they benefit even more by credibly precommiting not to …

Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic … growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the … reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they …

with inflation performance. …

It has been argued that economies with more independent central banks experience lower inflation over time. In this … the inflation rate dynamics. Second, we implement a panel data analysis. We find evidence that legislative reforms that … modify the degree of independence of a central bank have a strong impact on the inflation rate dynamics. Moreover, underlying …

framework is then used to interpret the evolution of central bank independence from the Great Inflation throughout the Great …

interpret the evolution of the central bank independence from the Great Inflation and during the Great Moderation – i.e. from …

-benevolent government. Although this reform would be socially beneficial and initially succeed in reducing inflation, it would fail to lower … inflation permanently. The smaller anticipated policy distortions implemented by a more independent central bank would induce … the fiscal authority to trade-off higher current deficits for lower future deficits. In the long run, inflation would …

-bias arises due to the lobbying pressures of outsiders. Furthermore, we show that if lobbying pressures are high enough, an … feature of lobbying pressures has an impact on the stabilization properties of monetary policy. When a supply shock occurs …, the shock is totally absorbed by a forward-looking trade-union which has no costs of lobbying, independently of any finite …

to support the standard objection to such policies: that they will lead to uncontrollable inflation. Theoretical models … support for a relationship between monetary financing and inflation. The findings lend support to recent calls for explicit …

that de jure central bank independence is more robust than de facto in reducing inflation. However, the effect of de facto … concludes that central bank independence may play a role in managing inflation in developing countries with high inflation and …