Economic policy responses to the COVID-19 pandemic: The role of central bank independence

Elgin, Ceyhun; Yalaman, Abdullah; Yasar, Sezer; Basbug, Gokce

Abstract

Is central bank independence (CBI) associated with economic policy responses to mitigate the adverse economic effects of the COVID 19 pandemic? In this paper, we provide cross-country evidence that it does. Our results generally indicate that more independent monetary policy authorities have adopted smaller cuts in the policy rate and reserve requirements. However, fiscal and macro-financial packages are relatively larger in countries with more independent central banks. These results are robust to different sets of control variables and different econometric specifications that include an instrumental variable estimation.

Citation

Elgin, C., Yalaman, A., Yasar, S., & Basbug, G. (2021). Economic policy responses to the COVID-19 pandemic: The role of central bank independence. Economics Letters, 204, Article 109874. https://doi.org/10.1016/j.econlet.2021.109874

• Journal Article Type: Article
• Acceptance Date: Apr 20, 2021
• Online Publication Date: Apr 27, 2021
• Publication Date: 2021-07
• Deposit Date: Dec 17, 2024
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Electronic ISSN: 1873-7374
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 204
• Article Number: 109874
• DOI: https://doi.org/10.1016/j.econlet.2021.109874
• Public URL: https://durham-repository.worktribe.com/output/3222730