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September 5, 2025Open Access

Does Central Bank Independence Affect Inflation?

Key Points

Central bank independence significantly reduces inflation in Western Balkan countries studied.
Results demonstrate a clear negative correlation between central bank independence and inflation levels from 2010 to 2022.
The panel Autoregressive Distributed Lags model was applied to analyze the effects across six countries.
Findings highlight the importance of using monetary tools to regulate inflation effectively.

Abstract

Abstract The objective of this paper is to analyze the impact of central bank independence on inflation in Western Balkan countries, from 2010q1 to 2022q4. In this paper the panel Autoregressive Distributed Lags (ARDL) model for six Western Balkan countries is used to analyse the effects of central bank independence on inflation. Results show that central bank independence has a negative effect on inflation in countries studied. These findings help management of banks and policymakers to find other monetary tools to reduce inflation and develop more effective regulations. The paper recommends central banks to use central bank independence to fight inflation.

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Cite This Study

Vera Gojčaj (Mon,) studied this question.

synapsesocial.com/papers/68bb4d196d6d5674bcd00c39 https://doi.org/https://doi.org/10.2478/jcbtp-2025-0027

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