The impact of central bank’s independence on macroeconomic indicators

Abstract

The article reveals the relationship between the Central Banks’ Independence (CBI) and
macroeconomic indicators for post-Soviet and developed countries. Many publications are devoted to
the problem of the influence of CBI on inflation. Still, its influence on other macroeconomic indicators
has not been sufficiently studied, especially for post-Soviet countries. This article presents the results of
testing the hypothesis about the presence and direction of influence of CBI on macroeconomic indicators:
economic growth, exports, imports, and income inequality. The study used panel data analysis with fixed
effects on twenty years of data starting from 2001. According to the results, an increase in CBI, evaluated
by two well-known indices, contributes to a decline in economic growth rates, a decrease in exports and
imports, and a decrease in income inequality in post-Soviet countries but does not significantly impact
developed countries. At the same time, a statistically significant impact of some sub-indices of these
indices on them was revealed in both post-Soviet and developed countries. The results of this study
reflect the importance of central bank independence, especially in post-Soviet countries, in achieving
economic development goals.