The relationship between Central Bank independence and inflation: An empirical analysis for inflation targeting countries

Although the issue of the independence of the central bank is based on old history, it is still being studied and studied today. The central task of the central banks in the past to finance the public sector has changed to provide price stability. This task is on the official websites of many central banks. The theoretical and empirical studies of the price stability target can be provided by independent central banking. The importance attached to central bank independence is increasing day by day in order to ensure price stability. Because the central bank independence, which constitutes the precondition for price stability, stands out as a precondition for the inflation targeting regime, which also provides price stability. It is thought that an independent central bank will not be subject to pressure on price stability and will focus more on price stability. In this context, the independence of the central bank is deemed necessary to achieve success in price stability. In this study, the conceptual and theoretical framework of the independence of central bank is discussed and the factors affecting and influencing independence are examined. In addition, the relationship between central bank independence and macroeconomic variables was examined both theoretically and empirically. In the countries implementing the inflation targeting regime, the relation between central bank independence and inflation was analyzed empirically by panel data method. In this context, the selection of the countries implementing the inflation targeting regime as a sample country and the empirical test methods constitute the originality of the study.