Public Choice

, Volume 97, Issue 1–2, pp 1–12 | Cite as

Reconsidering the principal components of central bank independence: The more the merrier?

  • King Banaian
  • Richard C.K. Burdekin
  • Thomas D. Willett


We use principal component analysis to reassess the link between different attributes of central bank independence and inflation performance. We suggest that coding problems may account for the fact that almost none of the attributes included in the Cukierman index has a systematic, plausible relationship with inflation. The multi-faceted Cukierman index also seems to be out-performed by a much narrower index focusing solely on policy independence. These findings point to the importance of using public choice analysis to isolate the real problem here: namely, finding specific central bank structures that effectively insulate central bankers from political pressures.


Principal Component Analysis Public Finance Central Bank Public Choice Real Problem 
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Copyright information

© Kluwer Academic Publishers 1998

Authors and Affiliations

  • King Banaian
    • 1
  • Richard C.K. Burdekin
    • 2
  • Thomas D. Willett
    • 3
  1. 1.Department of EconomicsSt. Cloud State UniversitySt. CloudU.S.A.
  2. 2.Department of EconomicsdClaremont McKenna CollegeClaremontU.S.A.
  3. 3.Department of EconomicsClaremont Graduate School and Claremont McKenna CollegeClaremontU.S.A.

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