Central Bank Financial Strength and Policy Performance : An Econometric Evaluation / Peter Stella, Ulrich Klueh.

Format:

Book

Government document

Author/Creator:

Stella, Peter.

Contributor:

Klueh, Ulrich.

Series:

IMF Working Papers; Working Paper ; No. 2008/176

IMF working paper ; WP/08/176

IMF Working Papers

Language:

English

Subjects (All):

Banks and banking, Central--Econometric models.

Banks and banking, Central.

Monetary policy--Econometric models.

Monetary policy.

Physical Description:

1 online resource (69 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2008.

Language Note:

English

Summary:

The financial health of central banks and its relation to policy outcomes has recently been recognized as an important policy issue. While case study evidence clearly indicates that weak central bank finances can hamper effective policy implementation, the question of whether central bank financial strength influences policy performance remains controversial. This is due, in part, to a lack of econometric evidence. The paper presents a first step toward filling this gap, by providing a quantitative evaluation of the relationship between measures of central bank financial strength and policy performance, in particular inflation. The paper's major finding is that there indeed is a negative relationship between central bank financial strength and inflation outcomes. This relationship appears to be robust to the choice of alternative country samples, control variables, estimation strategies, and conceptualizations of central bank financial strength.

Contents:

Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Theoretical Considerations and Related Literature; A. Reasons for A Lack of Central Bank Financial Strength; B. Theories Linking Central Bank Financial Strength and Policy Performance; C. Related Empirical Evidence; III. Evaluating Cross-Country Indicators of Central Bank Financial Strength; A. Conceptualization of Central Bank Financial Strength and Data Sources; B. Recent Trends in Central Bank Profitability; 1. Return on Average Assets in a Large Sample of Central Banks, 1995-2005

2. Median Return on Average Assets in Bankscope Sample 3. Share of Central Banks with High Central Bank Financial Strength; 4. Share of Central Banks with Negative IFS Capital; 5. Central Bank Financial Strength in a Group of Western Hemisphere Countries; 6. Distribution of Reported Sum of Capital and OIN in Percent of Total Assets; 7. Distribution of Reported OIN in Percent of Total Assets; 8. Measures of Central Bank Revenues and Costs; IV. Econometric Analysis; A. Data and Approach; 9. Price Stability and Central Bank Financial Strength

B. Central Bank Financial Strength and Inflation in a Panel of Latin American and Caribbean Countries 1. Baseline Results with Alternative Control Variables and Excluding Outliers; 2. Fixed Effects Estimates with Alternative Control Variables; 3. Fiscal Variables and Alternative Dependent Variable; 4. Results for Central Bank Financial Strength; 5. Feasible Generalized Least Squares Estimation; C. Central Bank Financial Strength and Inflation in a Large Cross-Section of Countries; 6. Results for the Cross-Section; 10. Relationship Between Central Bank Financial Strength

7. Accounting for Extreme Cases of Balance Sheet Distortions 11. Relationship Between Central Bank Financial Strength and d; V. Policy Conclusions and Future Research; Appendix: Statistical Information and Figures; References; Footnotes

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF front page (ebrary, viewed February 26, 2014).

ISBN:

9786612841279

9781462303328

1462303323

9781452784397

1452784396

9781282841277

1282841270

9781451870343

1451870345

OCLC:

465418142