Journals Information
Universal Journal of Accounting and Finance Vol. 10(2), pp. 465 - 475
DOI: 10.13189/ujaf.2022.100211
Reprint (PDF) (740Kb)
The Central Bank Independence in Relation to Inflation and Growth: An Empirical Evidence from Vietnam
Van Hung Dao 1, The Dong Phung 1, Khac Lich Hoang 2, Thi Vinh Ha Nguyen 2, The Kien Nguyen 2,*
1 Academy of Policy and Development, Hanoi City, Vietnam
2 VNU University of Economics and Business, Vietnam National University, Vietnam
ABSTRACT
Central Bank Independence (CBI) is the ability of a central bank to control monetary instruments. It reflects the set of limits on the Government's influence on managing a central bank's monetary policy. CBI can be restricted or dilated on personnel, objective, policy, and lending aspects. There is quite ample empirical evidence that CBI helps reduce inflation and stimulate growth. However, some countries with high CBI still witness high inflation. This paper seeks to understand when central bank independence would promote inflation control effectiveness. By establishing a mathematical predictive model, the study shows that a certain level of dependence between the central bank and the Government will facilitate the dual goals of price stability and economic growth. The empirical evidence from Vietnam, where the Communist Party leads both entities, reveals the U-shaped relationship between CBI and inflation, but not growth.
KEYWORDS
CBI, Inflation, Economic Growth, Vietnam
Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Van Hung Dao , The Dong Phung , Khac Lich Hoang , Thi Vinh Ha Nguyen , The Kien Nguyen , "The Central Bank Independence in Relation to Inflation and Growth: An Empirical Evidence from Vietnam," Universal Journal of Accounting and Finance, Vol. 10, No. 2, pp. 465 - 475, 2022. DOI: 10.13189/ujaf.2022.100211.
(b). APA Format:
Van Hung Dao , The Dong Phung , Khac Lich Hoang , Thi Vinh Ha Nguyen , The Kien Nguyen (2022). The Central Bank Independence in Relation to Inflation and Growth: An Empirical Evidence from Vietnam. Universal Journal of Accounting and Finance, 10(2), 465 - 475. DOI: 10.13189/ujaf.2022.100211.