Central Bank independence and inflation: Evidence from emerging countries

This paper is mainly devoted to an empirical study of the legal and real independence of the Tunisian Central Bank as well as to estimating the correlation between the inflationary bias and the real independence of the emerging countries while applying new data sources. Our contribution consists, particularly, in measuring the indicators of legal and real Central Bank independence through applying, respectively, the Jacome (2001) and Cukierman's (1992) methods. In a second part, we are carrying out a descriptive and comparative analysis of inflation relative to the Maghreb countries designed to check the inflationary bias reduction. However, the third part is consecrated to the study of correlation between the real independence and the inflationary bias, performed over a sample of emerging countries with a panel estimation ranging over the period 1971–2004. Our results conform those achieved by Cukierman (1992), showing an acceptable proxy of the real and legal independence as well as the beneficial effects stemming from inflation. These findings conform those of De Haan (2007) and confirm a positive and non-significant correlation between real independence and inflation.