Atlantic Economic Journal

, Volume 28, Issue 1, pp 60–70 | Cite as

Controlling inflation in transition economies: The relevance of central bank independence and the right nominal anchor

  • Helmut Wagner


Controlling inflation is a central problem in transition economies. This paper asks under what conditions or even whether central bank independence helps in this task. The conclusion shows that merely imposing legal independence on the central bank may be ineffective or even counterproductive. It is necessary to make a monetary strategy and the responsibilities and restrictions of central bank policy transparent to the public. In addition, it is important that the right nominal anchor is selected—one that is, or is believed to be, effective and sustainable. Both monetary targeting and inflation targeting are assumed to be unsuitable for most transition countries. Instead, some kind of dynamic exchange rate targeting appears to be the most reasonable choice.


Exchange Rate International Economic Public Finance Central Bank Central Problem 
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Copyright information

© International Atlantic Economic Society 2000

Authors and Affiliations

  • Helmut Wagner
    • 1
  1. 1.Fernuniversitaet HagenGermany

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