استقلال بانک مرکزی و شفافیت : تکامل و اثربخشی

Over the past two decades, the pace of central bank reforms in terms of institutional independence and transparency has been particularly brisk. This paper examines the current level of central bank independence (CBI) and transparency in a broad sample of countries using newly constructed measures, and looks at the evolution in both measures from an earlier time period. The legal independence of central banks has increased markedly since the 1980s, while the rise in transparency since the late 1990s has been less impressive. Exploiting the time dimension of our data to eliminate country fixed effects and using instrumental variable estimation to overcome endogeneity concerns, we present robust evidence that greater CBI is associated with lower inflation. We also find that enhanced transparency practices are associated with the private sector making greater use of information provided by the central bank.

While central banks have existed since the seventeenth century, their purpose, functions and operations have evolved over time. The pace of reform in recent years has been particularly brisk. This paper focuses on reforms that bear on monetary policy (as opposed to those that relate to financial regulation and supervision, although here too reform has been widespread). Reforms have been focused in three areas in particular. First, the legal statutes governing central banks' operations and relations with other branches of government have been revised or rewritten in many countries, with a focus on increasing institutional independence from the executive. Second, as central banks have become more autonomous, efforts have been made to enhance their accountability. Third, central banks have attempted to become more transparent in their operations. This last change is both a complement to increased accountability and related to changes in how monetary policy is conducted, notably to the introduction of inflation targeting. In an attempt to quantify some of these developments, this paper details new measures of central bank independence and transparency.1 It provides a detailed account of the construction of the indices and also relates the indices to underlying economic and sociopolitical variables, as well as analyzing their effects on variables of interest. Two results are particularly worth highlighting. First, controlling for country fixed effects by taking first differences, we find robust evidence that central bank independence (CBI) reduces inflation. This effect is robust to controls for endogeneity and measurement error via instrumental variables estimation. Second, we present evidence that greater central bank transparency leads the private sector to make greater use of information provided by the central bank when making forecasts, consistent with the predictions of a simple signal extraction model. While there have been some recent measures of transparency and independence for subsets of countries (Eijffinger and Geraats, 2006, Cukierman et al., 2002 and Jácome and Vázquez, 2005), the measures here cover a more comprehensive set of countries and offer a more current picture.2 Our measures also facilitate a comparison over time. In the case of the independence measure, the comparison is between the original index constructed by Cukierman et al. (1992) covering the 1980s, and our index which is based on a database of central bank laws held by the IMF and is current through 2003. For our transparency index, which broadly follows the methodology of Geraats (2002) and Eijffinger and Geraats (2006), the comparison is between the late 1990s and 2006. The earlier measure is based on the results of the survey of central banks presented by Fry et al. (2000), while the updated measure is based on our reading of central bank transparency practices based on their websites and published documents. The literature on CBI is voluminous (Eijffinger and de Haan, 1996 and Berger et al., 2001 provide useful summaries). Its theoretical impetus came from the time inconsistency problem (Kydland and Prescott, 1977 and Barro and Gordon, 1983) and the solution offered by delegation to a conservative central banker (Rogoff, 1985) or to any independent policymaker with suitable incentives and a well-specified mandate (Walsh, 1995). In practice independence tends to follow one of two models (Debelle and Fischer, 1995 and Fischer, 1995): goal independence (where the central banker has autonomy to follow his own policy prerogatives) or instrument independence (where the central banker sets a policy instrument in pursuit of a goal specified by the government). Central bankers themselves, and some other commentators (Blinder, 1998), have been critical of the academic literature's focus on time inconsistency, arguing that it is not a relevant concern for modern central banks, particularly in industrial countries. The rationale for delegation can then be motivated by other concerns, including political economy factors (Crowe and Meade, 2007, Cukierman and Gerlach, 2003, Goodman, 1991, Hayo, 1998 and Lohmann, 1998). Whatever its theoretical merits, the case for CBI appears to have been accepted, with a sharp increase in autonomy since economists first started measuring it seriously in the late 1980s, as outlined in Section 2 below. Greater independence has occurred across all groups of countries, but has been particularly marked for developing and emerging market economies. While the theoretical case for CBI appears to have been accepted, empirical studies have found surprisingly limited evidence of independence delivering its promised anti-inflation benefits in practice. Hence, while the earliest studies of CBI focusing on a fairly narrow subset of industrial countries delivered this result (the best known of which is Alesina and Summers, 1993), later studies covering a wider set of developing and industrial countries have found more equivocal results (see Eijffinger and de Haan, 1996 and de Haan and Kooi, 2000Klomp and de Haan, 2007 and Sturm and de Haan, 2001). In Section 4 of the paper we revisit this relationship exploiting the time dimension of our data and find relatively robust evidence for the negative relationship between CBI and inflation predicted by theory. As central banks have become more independent, so the demand for transparency has increased, both for reasons of accountability and legitimacy, and to guide the expectations of financial market participants (whose appetite for information has expanded as financial markets have become broader and deeper). With respect to financial markets, central banks have also attempted to increase monetary policy effectiveness by using communication and transparency practices to shape expectations of future policy decisions and hence influence rates across the term structure (not just at the short end, over which they have some direct control).3 Monetary policy has also become more information-intensive with the increasing popularity of inflation targeting (IT) over simpler policy anchors such as a fixed exchange rate or money aggregate rule. Hence both the supply of and demand for central bank transparency seem to have increased (Blinder et al., 2001, Faust and Svensson, 2001 and Geraats, 2002). However, Section 3 of this paper presents evidence that, over the subset of industrial and emerging market economies analyzed here, overall levels of transparency have not increased significantly since the late 1990s. This result may reflect the short time period over which we measure the change and may be biased by some sharp drops in reported transparency which, in some cases, could be related to the different methodologies used to collect the underlying data in 1998 compared to 2006.4 Some specific examples of institutional reform – notably the creation of the European Central Bank (ECB) and the introduction of IT in a number of countries since 1998 – are associated with large and statistically significant increases in recorded transparency (Crowe and Meade, 2007).5 Increased central bank transparency can have a number of implications for macroeconomic variables (Geraats, 2002, provides a survey) but these tend to be rather model-specific and general lessons are hard to tease out. Transparency tends to be beneficial when information asymmetries are themselves the cause of inefficiencies in the economy, but can be costly in a second-best environment where the central bank is able to offset other inefficiencies by exploiting its informational advantage.6 Ultimately, however, the question of whether central bank transparency delivers tangible benefits is an empirical one, and one that we address in Section 5 of the paper. We find that greater transparency – in particular relating to the release of forecasts – is associated with the private sector making greater use of public rather than private information.

This paper presents in more detail the updated central bank independence (CBI) and transparency measures outlined in Crowe and Meade (2007), and also analyzes whether these new indices are related to causal factors discussed in the literature and whether they have the predicted effects. With respect to CBI, it finds a marked increase since indices were first constructed in the late 1980s, with developing and emerging market economies showing the most comprehensive increase across all dimensions of independence. Areas of independence pertaining to relations between the executive and the monetary authority – notably in terms of dispute resolution and central bank financing of government – demonstrate an increase in both advanced and emerging market and developing economies. However, areas of the index relating to appointment procedures for the governor and the existence of a well-documented policy target have increased significantly only for the latter group of countries, reflecting the fact that they were already relatively high in advanced economies. Increased independence appears to be related to initial conditions in the economy in question. In particular, reform has been most pronounced in more democratic countries, countries with higher initial inflation, countries with initially less independent central banks, and countries with initially less flexible exchange rate arrangements. We confirm that central bank legal independence has little measured impact on inflation in either the earlier or later period, but argue that this might be related to econometric problems. We attempt to overcome these problems by estimating the relationship in first differences, and also by instrumenting central bank independence using some measures of countries' overall governance quality. We are able to uncover a statistically significant negative effect of CBI on inflation via these techniques, in support of the theoretical literature that posits an inflation bias absent CBI. We also document the change over time in transparency practices, using data from 1998 contained in a Bank of England survey of central banks as well as our own data from 2006 based on a reading of central bank documents and websites. We find that transparency scores over this relatively short time period have not demonstrated a significant increase for the sample as a whole, but have for the advanced economies in our sample. Current transparency scores are positively correlated with overall governance quality measures, with central bank independence and with exchange rate flexibility, none of which is surprising but nevertheless is worth documenting. To test whether transparency has any measurable effects, we analyze the relationship between our transparency index and a measure of the private sector's use of private versus public information. We find some robust evidence that greater transparency is associated with more use of public information. The effect seems most pronounced when focusing explicitly on the components of the overall transparency index most closely pertaining to the public release of central bank forecasts. The results suggest a quantitatively significant effect, with a one standard deviation increase in the transparency score implying a doubling in the accuracy of the public signal. This result supports Crowe's (2006) finding that the introduction of inflation targeting (associated with an increase in our transparency score) is associated with a convergence in forecast errors among the private sector. We hope that the data presented here will be widely used to test other hypotheses in the area of central bank governance. We also believe that the methodology underlying our transparency index can be easily replicated to extend the country coverage and possibly build a time series going forward. Another fruitful area for future research is developing better instruments for both CBI and transparency measures in order to try to identify causal relationships.