Journal of Emerging Trends in Economics and Management Sciences: Home

Abstract:
In this paper we examine the relationship between inflation and central bank independence. A number of studies have demonstrated that the more independent a central bank is the more likely its inflation outcome will be low. Using data for 20 countries over the period 1988-2007, this paper attempts to investigate whether central bank independence can help achieve price stability in African countries where inflation is always a serious problem. The results obtained indicate that central bank independence contributes to reducing inflation rate. However, results obtained also indicate that CBI is not a sufficient condition to resolve the problem of inflation in African countries. Other accompanying measures such as the commitment for governments to hold a responsible balance budget are required.

Keywords: central bank independence, Africa, turnover rates, budget deficit, inflation

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