This study examines the effect of legal central bank independence on inflation in developing countries. In spite of the policy consensus suggesting that central bank independence is an effective tool to control inflation, the evidence is still limited, particularly for developing countries. Using a novel dataset, we analyze the effect of central bank independence on inflation for a sample of 118 developing countries between 1980 and 2013. We find that higher central bank independence is associated with lower inflation rates. This effect on inflation is stronger the more democratic a country is, but it is also present in non-democratic countries. Our results are robust to different specifications and methodologies. Furthermore, we find that all dimensions included in the measurement of central bank independence (objectives, personnel, policy, and financial independence) contribute to curb inflation. Our results shed light on which types of reforms may be more effective at fighting inflation in developing countries.

No abstract

Dev Policy Rev. 2017;35:675-702. | 675 wileyonlinelibrary.com/journal/dpr Abstract Credit rationing is a common phenomenon faced by firms, one that has negative implications for long-term investments. In Brazil, public credit plays a key role in supporting firms: state-owned banks account for almost half of the outstanding credit. Public credit programmes aim at reducing credit restrictions, increasing competitiveness and job creation for small and medium enterprises. This article analyzes the effectiveness of the credit lines managed by two main public institutions in Brazil. Results show that access to public credit lines has a significant positive impact onfirms' employment growth and exports, while no effect was found on wage differential. The impact on exports is driven by the increase in volumes among exporting firms rather than the probability of becoming an exporter.

No abstract

No abstract