Merkez Bankasi bağımsızlığı, mali piyasaların gelişmesi ve enflasyon

Central bank independence (CBI) and inflation relation has long been adebate and is established in many studies, such as Bade and Parkin (1982), Alesina(1988, 1989), Grilli, Masciandaro, and Tabellini (1991), and Cukierman, Webb andNeyaptı (1992). Although these studies address the negative relation between CBIand inflation, they do not consider the effect of the development level of financialmarkets on this relation. Posen (1995) considers the effect of financial marketdevelopment by using effective financial opposition to inflation formed by theinflation-averse groups. He tests the effect of this variable on CBI and inflationsimultaneously. He claims that the variable, which decreases inflation is effectivefinancial opposition to inflation (when used with CBI) rather than CBI. Thus, hestates that rather than analyzing the direct relation between inflation and CBI, theeffect of effective financial opposition to inflation on CBI and inflation should beinvestigated. Based on this study, this thesis looks at the effect of financial marketdevelopment (FMD) both on CBI and on the relation between CBI and inflation byusing alternative indicators for FMD. We find that there is a significant and positiverelation between CBI and FMD for non-transition countries. Moreover, althoughPosen (1995) states that CBI does not have a significant effect on inflation whenEFOI is included as an additional explanatory variable, we find evidence that bothFMD and CBI have a significant effect on inflation. However, the results of theestimations are not robust to changes in samples.Keywords: Central Bank Independence, Financial Market Development, Inflation