7 RESULTADOS
7.1 PROCEDIMIENTOS DE LAS CORPORACIONES AUTÓNOMAS REGIONALES PARA EL
7.1.3 Comparación entre CARs del procedimiento de otorgamiento de concesiones
substitute devices to attain price stability even in the presence of low CB independence,"
(1991 :62)
and cite Belgium, Panama and the Netherlands in support of this proposition. The issue as to whether goal dependence is a substitute for technical independence is an unresolved one. The authors report that for a relatively small sample of countries, indicative results suggest that when questionnaire variables are used to explain variations in inflation, "there is not much additional information ineither CB governors' turnover or in legal variables"
(1991 :63).
In
more recent research Fischer uses the Grilli, Masciandaro, and Tabellini (GMT) measure of legal central bank independence for eighteen industrialised countries, and reports a "significant negative relationship between the average rate of inflation and central bank independence"(1994: 295).
Moreover to isolate the relative impact of goal and instrument (in)dependence, Fischer recasts the GMT index of central bank independence into three components:• the presence of a statutory requirement that the central bank pursue monetary
stability among its goals
• those measure relating to the central bank's right not to finance the government, and to set the discount rate
• a combination of legal provisions relating to appointments and the central bank's relationship with the government,
and concludes that a "central bank's ability to use its instruments freely, is the single variable most highly correlated with inflation"
(1994: 296).
Reviewing the evidence on the relationship between central bank independence and economic performance, Fischer concludes that,"[t]he evidence leaves little doubt that, on average, economic performance is better in countries with more central banks. The relationship between inflation and the elements of CBI is attributable mainly to the central bank's ability to use its policy instruments freely (instrument independence) and to the presence of a price stability goal of We further tentatively conclude that the causation in industrialised countries, where legal provisions are likely to have more force, runs at least in part from legal independence to lower inflation. As an analytic matter, we expect less price variability and greater output variability in countries with more independent central banks. Such a relationship is not visible in the aggregate data. The elements of a trade-off are present in comparing United States and German data, and there must be such a trade-off for an efficient central bank. Finally, central bank independence does not appear to bring a credibility bonus in the labour markets; even independent central banks have to fight hard and long to
bring inflation down after an inflationary shock has struck" (1994: 301 , emphasis added).
More recently Eijffinger and De Haan have been somewhat more circumspect, concluding that,
"[a]lthough overwhelming evidence exists that central-bank independence and inflation are negatively related, one should be careful in jumping to this conclusion ... only limited support exists for the view that central-bank independence stimulates economic growth and that it does not reduce inflation costs. Furthermore, central-bank independence may be endogenous, in the sense that countries with a commitment to price stability may have a greater propensity for central-bank independence" (1996: 40).
The empirical evidence is inconsistent and at times contradictory. Reported relationships between central bank independence and macroeconomic outcomes are in part a function of the periods analysed, sensitive to the make-up of the country data sets, and to markedly diverse operationalisations of the concept.22 Some purport to demonstrate a strong and robust relationship between central bank independence and inflation performance (e.g. Alesina 1989; Busch, 1992; Way 1992; De Long and Summers, 1992; Fischer, 1994). Others suggest that the relationship is non-existent over the long-run (Capie and Wood, 1991) or indeterminate (Masciandaro and Tabellini, 1988) .23
22 Woolley takes issue with the methodological inexactitude of indexes of central bank independence, suggesting that they are incoherent:
"There is, at least as yet, no ability to say that some institutional features are necessary or sufficient for behavioural independence. Indeed, we can say more affinnatively that current research shows that no institutional configuration is either necessary or sufficient to guarantee low inflation"( 1 994: 63, emphasis in original).
23 At one level the indices of central bank independence developed on the basis of the 'statute reading' approach are only as robust as the association between statutory appearance and behavioural reality will admit (see Woolley, 1 984). Recent critiques of the statute reading methodology suggest an epistemological weakness in the construction of indices of central bank independence. Forder argues that,
" . . . the approach to testing the claim that 'central bank independence improves perfonnance' which has been adopted in the literature is methodologically misconceived ... any measure of independence which is derived from the statutes of central banks will inevitably be a measure of something other than the concept which the theoretical claim concerns" ( 1 996: 49; see also Forder, 1998).
Accepting, for the sake of argument, that the theoretical case for central bank independence is a robust one, Forder suggests that
" [ w ]hat needs to be recognised is that, for the purposes of testing the theory 'independent' is now defined to mean (amongst other things) 'not subject to (as many) 'short-tennist temptations'. For the purposes of the discussion independent has become a technical tenn, the meaning of which i s that long-tenn goals are pursued. This is the meaning that must be preserved when w e test and
On balance however economic theory and the empirical evidence reviewed to date suggest a strong case for central bank independence. At the theoretical level the 'credibility' and 'time-inconsistency' literature suggest that the combined effects of rational utility maximising political authorities and adaptive price setting behaviour will be inflationary, and that the solution lies in removing policy discretion from political authorities and vesting it in an independent authority - a central bank/banker placing a relatively higher weighting on price stability, or principal-agent contractual arrangements in which a central bank is provided with operational independence and an appropriate mix of incentives and sanctions. At the empirical level there is clearly some support for the proposition that independent central banks (variously defined
There are three issues involved:
• the statutes do not determine who actually takes policy decisions - "This is a matter of established norms of behaviour and political realities. A Bank might not have the ability to set policy simply because it is established practice that it complies with the government's wishes. This might be called the problem of power versus (statutory) independence. A Bank may have statutory independence. but lack practical power" (Ford er. 1996: 50)
• the Bank might be under implicit or explicit threat of legislation if it does not comply with the government's wishes. whatever the formal statute might provide (apparent versus actual independence)
• if a bank does possess the necessary power and independence it too might be influenced by short-term considerations (e.g. facilitating the election of a government better disposed towards the banks preferred set of institutional arrangements). (Forder. 1 996: 50).
But there may be a further complication - if the issue is one of clarifying actual behaviour as distinct from the behaviour implied by statutory provisions and formal institutional arrangements. what are the 'drivers' for those financial actors with whom central banks engage? If the behaviour of those in financial markets is influenced by their reading of statutes. or commentaries on those statutes - then the behaviour of central banks may matter less than the veneer of institutional appearance - for financial actors independence may be what the indices 'measure', whatever the lack of congruence between those indices and actual behaviour. Actual independence may be obfuscated by the appearance of institutional dependence of some kind, or, the suggestion of institutional arrangements which are politically porous. A 'credibility dividend' may be generated from a change which is more superficial (in the form of the statutory or the institutional arrangements) than substantive. In other words, credibility will be a function of of independence, and those perceptions in turn (particularly from a distance) may well be a function of a superficial reading of some formal index of institutional independence. As Woolley observes:
"We would like to be assured that the institutional arrangements actually make some difference at the level of policy instruments. We want to know that policy (not a macroeconomic outcome like inflation, which may have several causes) is different from what it would be in the absence of institutional arrangements. Demonstrating a cross-national association between institutional structure and inflation outcomes is a long way from showing that the institutional structure causes the differences in outcomes. Did the central bank ever act independently " ( 1 994:63, emphasis in original).
In part the critique rests on a distinction between central bank independence operationalised on the basis of the statute reading approach, and a somewhat more dynamic conception of independence informed by central bank behaviour.