Link between central bank independence & inflation

This IMF Working Paper published on 21 April reviews central bank legislation in 24 countries in Latin America and the Caribbean during the 1990s. Using panel regressions, the authors find a negative relationship between legal central bank independence (CBI) and inflation.

This result holds for three alternative measures of CBI and after controlling for international inflation, banking crises, and exchange regimes. The result is also robust to the inclusion of a broader indicator of structural

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