ESTIMATING THE IMPACT OF CENTRAL BANK INDEPENDENCE UPON MACROECONOMIC PERFORMANCE USING A PANEL DATA MODEL

This paper analyzes a new index for measuring central bank independence and inflation targeting in order to evaluate and assess the impact of central bank’s independence level upon the macroeconomic performance. The new index for measuring central bank independence and inflation targeting has three main pillars: central bank political and legal independence, central bank governance and conduct of monetary policy and central bank transparency and accountability. Moreover, the paper intends to evaluate the impact of central bank independence based on the new index upon some macroeconomic indicators, such as the inflation rate, the output, the unemployment rate, the budgetary deficit and the current account deficit.