Free The impact of Central Bank independence on price stability: Does independence lead to lower fiscal deficits? Dissertation Example
THE IMPACT OF CENTRAL BANK INDEPENDENCE ON PRICE STABILITY: DOES INDEPENDENCE LEAD TO LOWER FISCAL DEFICITS?
An independent central bank has significant impacts on the rate of inflation, price stability, and fiscal deficit. In the democracies with independent central banks, the fiscal balance is more stable compared to the countries with non-neutral central banks. Other than the central banks, it is essential to understand there are external factors that could affect fiscal balance. For instance, election years, budget statements, media freedom and the executives have a significant influence on the fiscal stability. Thus, the research will analyze reports and documents to internalize the impacts on the independent central banks on the fiscal balance.
The research on the impact on the independence of central banks on the fiscal deficit will be based on three primary questions. They include;
What factors affect the effectiveness of independent central banks in creating fiscal balance?
Do independent central banks lower the fiscal deficit in all democracies?
What is the impact of government budget statement on the fiscal balance in economies with independent central banks?
The Significance of the Study
The findings of the research will improve the role of the central bank ensuring economic growth across the world. The research will also provide insights on future studies focusing on the central bank as a tool of economic development in less developing nations.
Previous studies have focused on the effects of the independent central banks on the price stability and economic growth. There is insufficient information on the impact of independent central banks on the fiscal deficit. Some research argues that countries with independent central banks experience low fiscal deficits and stable growth. However, it is important to note that lower deficit also results from media freedom and executive power. Other studies have shown fiscal deficit is influenced by occur elections, government executives, and politicians. Therefore, the study will review various studies to understand the effects of the independent central banks around the world to come up with solid conclusion and recommendations.
The research will apply historical information in both the states with independent central banks, and in countries, the central bank is run by the government. For the case of the independent central bank, the data will cover the period before the central bank was given independence and after to determine its impact on the fiscal deficit. All the data collected will be primary information from the central banks that will be sampled in studying the effects on the independent central banks on the fiscal deficit. The research will seek documents and reports on central bank policies and the resulting fiscal levels in different periods.
There will also be comparative studies between the nations with independent central banks and those that are controlled by the government to determine the impacts on the fiscal deficit. The comparative methods will also provide insights on the difference between independent central banks between the election and non-election periods. The research will apply both the qualitative and quantitative analytical techniques to analyze the data collected from the central banks’ policies and economic indices.
Conclusion and Recommendation
The conclusions and recommendations will be based on the analysis of the documents and reports on the independent central banks. Besides, the comparative studies between countries with independent central banks and those controlled by the state will provide recommendations on the best policy to promote fiscal deficit.
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