Social and Behavioral Sciences Commons^™

Central Bank Independence: Rules, Practices, And Outcomes, Douglas Aaron Block

Open Access Theses & Dissertations

In recent years interest has grown in central bank independence as research has shown that it may affect many important financial issues such as unemployment, inflation, and inflation variability, among others. However, empirical evidence regarding its effect has been inconclusive and there is low correlation among various legal central bank independence measures. In this thesis, I attempt to resolve these problems by generating a new measure of legal central bank independence that takes into account divergence between laws and practices. I then measure the impact that democracy and proportional electoral systems have on reducing this divergence and find that democracy …