چرا ثبات قیمت و استقلال قانونی بانک مرکزی همبستگی منفی دارند؟ نقش فرهنگ

This paper investigates whether in OECD countries the negative relation between central bank independence and inflation is related to culture, in the sense of common values and norms. It appears that inflation is lower in countries where people dislike uncertainty. Countries, where inhabitants perceive that there should be an order of inequality and a centralisation of authority, are characterised by a dependent central bank and, to a lesser extent by relatively high inflation rates. Hence, the national attitude towards inequality among people appears to be a third factor explaining the negative correlation between inflation and the degree of central bank independence.

There is overwhelming empirical evidence (surveyed in Berger et al., 2000 and Eijffinger and De Haan, 1996) supporting the proposition that, in cross-country analyses, an independent central bank (measured by an index of legal independence) and low rates of inflation are negatively correlated. Until recently, this correlation was assumed to confirm a causal relation from central bank independence to inflation rates. The causation assumed from central bank independence to inflation performance is coming under question. It has been suggested that the negative correlation between inflation and central bank independence is caused by a third factor. Candidates for this third factor are the opposition of the financial sector against inflation (Posen, 1995), the nation's degree of inflation aversion (Debelle, 1996), social cohesion (Prast, 1998), nationwide consensus (De Grauwe, 1998), and culture and tradition of monetary stability Berger et al., 2000 and Eijffinger and De Haan, 1996. Empirical analysis has been restricted to a large number of investigations of the influence of central bank independence on inflation and a few studies on the determinants of central bank independence (see, e.g. De Haan and van't Hag, 1995, Eijffinger and Schaling, 1996 and Moser, 1999). As far as I know, only three empirical studies Posen, 1995, Hayo, 1998 and Moser, 1999 take the suggestion seriously that inflation and central bank independence are (partly) determined by the same set of variables. In Posen's study, this third factor is the effective financial opposition to inflation. A crucial assumption of his approach is that the financial sector dislikes inflation. Posen (1995, p. 257) claims that the bankers' vulnerability to inflation is well established although he admits that this attitude is not yet fully explained. On the contrary, recent studies find a positive (though not always significant) relation between the net interest margin and bank profitability, on one hand, and inflation, on the other (Demirgüç-Kunt and Huizinga, 1998, pp. 19 and 20). Van Lelyveld (2000, Chapter 7), therefore, estimates the country specific influence of inflation on the commercial banks' profitability. This sensitivity to inflation is regarded as the banks' preference for inflation and is used for improving the index of Financial Opposition to Inflation (FOI). This ‘true’ FOI is strongly correlated with inflation. Van Lelyveld interprets this empirical result as that a high level of inflation forms an incentive for banks to lobby for a dependent central bank. Just the opposite causal direction as put forward by Posen. Moreover, De Haan and Van't Hag (1995) only find mixed support for Posen's hypotheses. Hayo (1998) introduces the concept of an inflation culture, which in his view leads to a national consensus on price stability and central bank independence. The inflation culture is the result of a historical feedback process where inflation aversion and central bank independence reinforce one another. Hayo approximates inflation aversion by means of the sensitivity of people's preference for low inflation to changes in the actual level of inflation. Various issues of the Eurobarometer are used for estimating this sensitivity.1 It appears that the proxies of inflation aversion have a significant negative correlation with inflation. “The indicators of economic and political independence of the central banks are positively correlated with the estimated sensitivity parameters. In most cases, though, this correlation is not significant” (Hayo, 1998, p. 258). Hayo's approach has two drawbacks. First, due to data limitations, the analysis is restricted to European countries and partial correlations. Second, his paper does not provide a theory to explain why in one country the historical feedback process leads to low inflation and an independent central bank and in the other to high inflation and a dependent central bank. Moser (1999) argues that the level of independence of the central bank is related to the (non)existence of checks and balances among political decision bodies (parliamentary chambers, executive, or the people in the case of a referendum or direct democracy). Countries in which these bodies are independent of each other are characterised by an independent central bank. Moreover, in these countries, the independence of the central bank is also more effective in reducing inflation than in countries with dependent central banks and weak or no checks and balances. While one can agree with Moser that support by the political system is important, a disadvantage of his approach is, however, that the checks and balances argument refers to the relation between two bodies of the legislation, whereas central bank independence refers to the relation between one of these bodies (the government) and a specialised institute of the executive branch. The present paper develops a theory on the impact of culture in the sense of common values, on inflation and central bank independence. It appears that, in theory, two cultural variables—Power Distance and Uncertainty Avoidance—have opposite effects on inflation and central bank independence and thus are candidates for explaining the negative correlation between the latter two. Power Distance reflects the extent to which the inhabitants of a country accept that power is distributed unequally within the society. Uncertainty Avoidance refers to the tolerance of uncertainty (ambiguity) that can be found in people. An empirical analysis of 18 OECD countries is employed to investigate the relationship between these cultural dimensions and inflation and central bank independence. The paper proceeds as follows. Section 2 presents a framework for analysing the relation between culture, institutions and economic performance. In Section 3, this framework is used for deriving relations between cultural characteristics, on one hand, and inflation and central bank independence, on the other. The empirical analysis for 18 OECD countries is presented in Section 4. Section 5 contains the conclusions.

There is substantial empirical evidence of a negative correlation between central bank independence and inflation. This correlation has been interpreted as causation from central bank independence to inflation. Recently, however, many authors have questioned this causation running from central bank independence to inflation. Critics argue that there could be a third factor explaining the negative relation between central bank independence and inflation. In this paper, I have investigated the suggestion that culture in the sense of common values is this third factor. The cultural dimensions of Hofstede—Power Distance and Uncertainty Avoidance—have been used as the cultural dimensions that serve as this third factor. Countries that score high on Power Distance are also characterised by an unequal distribution of income (which can be a result of inflation), and a centralisation of political power. The latter results in institutions that are highly dependent on the central government. Hence, Power Distance is expected to be positively correlated with inflation and negatively with central bank independence. Inflation leads to uncertainty so that we expect inflation to be low in countries in which the inhabitants see uncertainty as a threat. Another characteristic of countries that score high on Uncertainty Avoidance is a preference for specialised institutions. Hence, Uncertainty Avoidance and central bank independence are expected to be positively correlated. These hypotheses have been tested for eighteen OECD countries for which data are available. In these countries, cross-country differences in inflation appear to be related to the attitude of people with regard to uncertainty: inflation is lower in countries where people more dislike uncertainty. The tolerance of inequality in the society (reflected in the Power Distance or Masculinity) appears to be of less importance. The degree of independence of the central bank is correlated with Power Distance, which reflects the extent to which one is willing to share authority in the society. In accordance with this sharing-authority argument, the extent to which the legislative bodies share equally the legislative function also appears to be important. The exchange rate mechanism is the only noncultural factor that significantly correlates with central bank independence: central banks are more independent in countries with flexible exchange rates. Results confirm the hypothesis that cultural dimensions matter. At first sight, there is not, however, one single dimension that dominates in the sense that it is the most important cultural factor correlated with both inflation and central bank independence. A closer look reveals, however, that the tolerance of inequality with respect to income, wealth and authority is in all likelihood the best candidate for the common third factor behind inflation and central bank independence. Although Uncertainty Avoidance is the most important cultural dimension related with inflation, a measure correlated with the acceptance of differences in authority and inequality—Power Distance, Masculinity—is often also significant. Power Distance is significantly correlated with central bank independence. Hence, I conclude that, in all likelihood, the acceptance of differences in authority and inequality—mostly represented by Power Distance and sometimes by Masculinity—is the best candidate for being the factor correlated with inflation and central bank independence.