Nowadays, it is widely believed that a high degree of Central Bank Independence coupled with some explicit mandate for the Central Bank (CB) to restrain inflation is an important institutional device to enusre price stability.
This paper aims to exa
mine the Grilli-Masciandaro-Tabellini (GMT) index of central bank independence, based on CB legislation as of end-2003. The researcher calculates indexes of central bank independence (CBI) for 82 central banks as of end-2003. Our analysis confirms that greater CBI has on average helped to maintain low inflation levels.
