Assessing central bank independence in developing countries: do actions speak louder than words?

My fiscal dominance hypothesis of central bank independence posits that the size of the government's deficit and the methods by which it is financed determine central bank independence m developing countries. I measure central bank independence by the extent to which a central bank neutralises the effects of increased credit demands by the government on the money supply by reducing credit to the private sector My estimates show that larger deficits and greater government reliance on the domestic banking system are associated with less central bank neutralisation of mcreased government borrowing from the banking system.