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The Impact of Central Bank Independence on Inflation: Evidence from Developing Countries

Rosemarie Paul

Bank Parikrama: A Journal of Banking and Finance2025https://doi.org/10.64204/bp1019-7044/50(1)/a20259article
ABDC C
Weight
0.50

What the paper says

The study investigates how variations in Central Bank Independence (CBI) affect inflation dynamics in developing countries. While theoretical arguments suggest that an independent central bank may reduce inflationary bias caused by political interference and time-inconsistent monetary policies, empirical evidence for developing countries remains limited and inconclusive. Employing a two-step System GMM, we identify that higher CBI significantly reduces both inflation levels and fluctuations, supporting its role as a crucial institutional mechanism for sustaining price stability. Moreover, the results indicate that money supply acts as the transmission link in which CBI reduces inflation. These findings underscore the importance of strengthening central bank autonomy to enhance macroeconomic stability in developing countries.

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https://doi.org/https://doi.org/10.64204/bp1019-7044/50(1)/a20259

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@article{rosemarie2025,
  title        = {{The Impact of Central Bank Independence on Inflation: Evidence from Developing Countries}},
  author       = {Rosemarie Paul},
  journal      = {Bank Parikrama: A Journal of Banking and Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.64204/bp1019-7044/50(1)/a20259},
}

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The Impact of Central Bank Independence on Inflation: Evidence from Developing Countries

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.