Central Bank Independence, Speed of Disinflation and the Sacrifice Ratio

Giuseppe Diana () and Moise Sidiropoulos

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: This paper examines the impact of central bank independence on inflation persistence. Our theoretical analysis predicts that a higher degree of central bank independence leads to a lower inflation persistence and therefore to a higher speed of disinflation. The empirical results, provided using a 18 OECD countries sample, show that central bank independence is negatively related to the degree of inflation persistence. In addition, as there is a positive correlation between inflation persistence and the sacrifice ratio, we conclude that central bank independence, through its influence on inflation persistence, is negatively correlated to the sacrifice ratio.

Keywords: central bank independence; inflation persistence; speed of disinflation; sacrifice ratio. (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (11)

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Journal Article: Central Bank Independence, Speed of Disinflation and the Sacrifice Ratio (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2003-08

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