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:: Volume 11, Issue 1 (Winter 2016) ::
J. Mon. Ec. 2016, 11(1): 15-30 Back to browse issues page
Central Bank Independence and Central Bank Conservatism: Theory with an Application to Iran
Kaveh Derakhshani Darabi 1, Ahmad Jafari Samimi2
1- Faculty of Humanities, Arak University
2- Faculty of Economics and Administrative Science, University of Mazandaran
Abstract:   (2159 Views)

New monetary literatures widely concentrates on the importance of institutional arrangements in the effectiveness of monetary policy. The debate regarding the optimal institutional design of central banks, independence and conservatism are usually considered to be the most important ingredients for a stable and successful monetary policy. Therefore, the purpose of this study is to deal with the institutional arrangements of monetary policy especially Central Bank Independence (CBI) and Central Bank Conservatism (CBC). Indices used by Grilli et al. (1991), Cukierman (1992), Mathew (2006) and Dumiter (2009) were applied to calculate the CBI during 1961-2016, and CBC in Iran using a dynamic optimal solution under commitment in Barro-Gordon and New-Keynesian forward looking Philips Curve models. Results show that the relative concern on inflation is smaller than that on output gap for the central bank of Iran. Also results regarding the calculations of CBI based on different indices reveals the fact of insufficient independence of central bank in Iran.

JEL Classification: C57, E42, E58

Keywords: Central Bank conservatism, Inflation averse, Loss function, Central Bank independence
Full-Text [PDF 230 kb]   (939 Downloads)    
Type of Study: Original Research - Theoric | Subject: Economics
Received: 8 Apr 2018 | Accepted: 8 Apr 2018 | Published: 8 Apr 2018
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Derakhshani Darabi K, Jafari Samimi A. Central Bank Independence and Central Bank Conservatism: Theory with an Application to Iran. J. Mon. Ec.. 2016; 11 (1) :15-30
URL: http://jme.mbri.ac.ir/article-1-254-en.html

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Volume 11, Issue 1 (Winter 2016) Back to browse issues page
Journal of Money and Economy Journal of Money And Economy
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