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Central Bank Independence and Democracy: Does CorporatismMatter?

digital Central Bank Independence and Democracy: Does CorporatismMatter?
Article
journal RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI
issue RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2007 - 4
title Central Bank Independence and Democracy: Does CorporatismMatter?
authors
publisher Vita e Pensiero
format Article | Pdf
online since 2007
issn 0035-676X (print) | 1827-7918 (digital)
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In this paper we test the hypothesis that central bank independence is closely correlated to social agreement about decisions on income distribution. Using data from a panel of OECD countries over the period 1972-2002 and controlling for several macroeconomic factors, we find evidence in favour of this hypothesis. When some indexes of corporatism are used to allow for the degree of social agreement on income distribution and its determination, the relationship between inflation and CBI weakens considerably. This evidence is consistent with the mechanism posited in Pittaluga - Cama (2004) according to which society formally endows the central bank with independence in order to safeguard a key principle of democracy, namely that decision-makers should be clearly responsible for their choices and actions.

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