Does central bank independence really matter? New evidence for developing countries using a new indicator

This paper provides a new indicator for central bank independence (CBI) bas ed on the turnover rate of central bank governors for 82 developing countri es over the period 1980-1989. Using this new indicator it is concluded that this proxy for CBI is related to inflation, only if the high inflation cou ntries are included in the sample. The view that both CBI and inflation are caused by effective opposition towards inflation is not supported. Using b oth the extreme bound analysis and Sala-i-Martin's method we do not find ev idence that CBI is robustly related to economic growth. (C) 2000 Elsevier S cience B.V. All rights reserved. JEL classification E42; E58.