CENTRAL BANK INDEPENDENCE AND ECONOMIC GROWTH:  A TIME SERIES ANALYSIS FOR OECD COUNTRIES

Berkay Altındaş; Özgür Balmumcu; Aytaç Pekmezci; Kurtuluş Bozkurt

Article Details

CENTRAL BANK INDEPENDENCE AND ECONOMIC GROWTH: A TIME SERIES ANALYSIS FOR OECD COUNTRIES

Authors:

Berkay Altındaş | Özgür Balmumcu | Aytaç Pekmezci | Kurtuluş Bozkurt

Publisher:

Zonguldak Bulent Ecevit University

Main Topics:

Zaman Serileri Analizi | Büyüme | Para-Bankacılık

Journal:

Uluslararası Yönetim İktisat ve İşletme Dergisi Vol.21 Issue 1, pp.367-390

Document Type:

Article

Publication Date:

3/2025

Document Language:

Turkish

Document ID (Org No.):

2001343604

pISSN:

2147-9208

Keywords:

Abstract:

 The aim of this study is to empirically analyze the effects of inflation and central bank independence variables on economic growth using annual data covering the period 1972-2017 for 16 selected OECD member countries. The hypothesis of the study is that the independence of the central bank stimulates economic growth. In this context, the study first presents the theoretical background on the relationship between central bank independence and economic growth, and then, a review of previous empirical studies in the literature is presented. In the empirical analysis of the study, firstly, the stationarity levels of the series of variables were first determined by Augmented Dickey Fuller ADF and Phillips-Perron PP unit root tests. Subsequently, the relationship between the dependent variable economic growth series and the independent variables inflation rate and central bank independence series were analyzed by means of Johansen cointegration test, Granger causality test and Toda-Yamamoto test in accordance with the lag lengths determined. According to the empirical findings obtained, as a result of the Johansen cointegration test a cointegration relationship was revealed only in Turkey and Finland. As a result of the Granger causality test, a one-way causality relationship was found from central bank independence to economic growth in Japan and Mexico, and bidirectional causality relationship was detected between central bank independence and economic growth in South Korea. As a result of the Toda-Yamamoto test, no relationship was found between central bank independence and economic growth in the countries analyzed. In conclusion, the evidence on the relationship between economic growth and central bank independence in OECD member countries highlights the importance of central bank independence in these days of evolving and expanding central bank responsibilitiy and the need to design strategies to enhance the reliability and effectiveness of central banks in supporting economic growth.

 The aim of this study is to empirically analyze the effects of inflation and central bank independence variables on economic growth using annual data covering the period 1972-2017 for 16 selected OECD member countries. The hypothesis of the study is that the independence of the central bank stimulates economic growth. In this context, the study first presents the theoretical background on the relationship between central bank independence and economic growth, and then, a review of previous empirical studies in the literature is presented. In the empirical analysis of the study, firstly, the stationarity levels of the series of variables were first determined by Augmented Dickey Fuller ADF and Phillips-Perron PP unit root tests. Subsequently, the relationship between the dependent variable economic growth series and the independent variables inflation rate and central bank independence series were analyzed by means of Johansen cointegration test, Granger causality test and Toda-Yamamoto test in accordance with the lag lengths determined. According to the empirical findings obtained, as a result of the Johansen cointegration test a cointegration relationship was revealed only in Turkey and Finland. As a result of the Granger causality test, a one-way causality relationship was found from central bank independence to economic growth in Japan and Mexico, and bidirectional causality relationship was detected between central bank independence and economic growth in South Korea. As a result of the Toda-Yamamoto test, no relationship was found between central bank independence and economic growth in the countries analyzed. In conclusion, the evidence on the relationship between economic growth and central bank independence in OECD member countries highlights the importance of central bank independence in these days of evolving and expanding central bank responsibilitiy and the need to design strategies to enhance the reliability and effectiveness of central banks in supporting economic growth.

 The aim of this study is to empirically analyze the effects of inflation and central bank independence variables on economic growth using annual data covering the period 1972-2017 for 16 selected OECD member countries. The hypothesis of the study is that the independence of the central bank stimulates economic growth. In this context, the study first presents the theoretical background on the relationship between central bank independence and economic growth, and then, a review of previous empirical studies in the literature is presented. In the empirical analysis of the study, firstly, the stationarity levels of the series of variables were first determined by Augmented Dickey Fuller ADF and Phillips-Perron PP unit root tests. Subsequently, the relationship between the dependent variable economic growth series and the independent variables inflation rate and central bank independence series were analyzed by means of Johansen cointegration test, Granger causality test and Toda-Yamamoto test in accordance with the lag lengths determined. According to the empirical findings obtained, as a result of the Johansen cointegration test a cointegration relationship was revealed only in Turkey and Finland. As a result of the Granger causality test, a one-way causality relationship was found from central bank independence to economic growth in Japan and Mexico, and bidirectional causality relationship was detected between central bank independence and economic growth in South Korea. As a result of the Toda-Yamamoto test, no relationship was found between central bank independence and economic growth in the countries analyzed. In conclusion, the evidence on the relationship between economic growth and central bank independence in OECD member countries highlights the importance of central bank independence in these days of evolving and expanding central bank responsibilitiy and the need to design strategies to enhance the reliability and effectiveness of central banks in supporting economic growth.

 Bu çalışmanın amacı, seçilmiş 16 OECD üyesi ülkenin 1972-2017 dönemini kapsayan yıllık verileri kullanılarak; enflasyon ve merkez bankası bağımsızlığı değişkenlerinin ekonomik büyüme üzerindeki etkilerini ampirik olarak analiz etmektir. Çalışmanın hipotezi merkez bankası bağımsızlığının ekonomik büyümeyi harekete geçirdiği şeklinde kurulmuştur. Bu kapsamda çalışmada öncelikle merkez bankası bağımsızlığı ve ekonomik büyüme arasındaki ilişkiye dair teorik zemin ortaya konulmuş, sonrasında literatürde daha önce yapılmış ampirik çalışmaların derlemesi sunulmuştur. Çalışmanın ampirik analizinde ilkönce değişkenlere ait serilerin durağanlık düzeyleri Augmented Dickey Fuller ADF ve PhillipsPerron PP birim kök testleri ile belirlenmiştir. Akabinde bağımlı değişken ekonomik büyüme serisi ile bağımsız değişkenler enflasyon oranı ve merkez bankası bağımsızlığı serileri arasında tespit edilmiş gecikme uzunluklarına uygun olarak Johansen eşbütünleşme testi, Granger nedensellik testi ve Toda-Yamamoto testi aracılığıyla analiz edilmiştir. Elde edilen ampirik bulgulara göre, Johansen eşbütünleşme testi sonucunda sadece Türkiye ve Finlandiyada eşbütünleşme ilişkisi tespit edilmiştir. Granger nedensellik testi sonucunda Japonya ve Meksikada merkez bankası bağımsızlığından ekonomik büyümeye doğru tek yönlü, Güney Korede merkez bankası bağımsızlığı ile ekonomik büyüme arasında çift yönlü nedensellik ilişkisi saptanmıştır. Toda-Yamamoto testi sonucunda ise incelenen ülkelerde merkez bankası bağımsızlığı ile ekonomik büyüme arasında bir ilişki saptanmamıştır. Sonuç olarak OECDye üye ülkelerde ekonomik büyüme ile merkez bankası bağımsızlığı arasındaki ilişkiye dair elde edilen kanıtlar, merkez bankasının sorumluluğunun değişip genişlediği bu günlerde önemini ortaya koymakta ve ekonomik büyümenin desteklenmesinde merkez bankalarının güvenilirliğini ve etkinliğini artıracak stratejilerin tasarlanması gerekliliğini gözler önüne sermektedir.

Article Details

CENTRAL BANK INDEPENDENCE AND ECONOMIC GROWTH: A TIME SERIES ANALYSIS FOR OECD COUNTRIES

Authors:

Berkay Altındaş | Özgür Balmumcu | Aytaç Pekmezci | Kurtuluş Bozkurt

Publisher:

Zonguldak Bulent Ecevit University

Main Topics:

Zaman Serileri Analizi | Büyüme | Para-Bankacılık

Journal:

Uluslararası Yönetim İktisat ve İşletme Dergisi Vol.21 Issue 1, pp.367-390

Document Type:

Article

Publication Date:

3/2025

Document Language:

Turkish

Document ID (Org No.):

2001343604

pISSN:

2147-9208

Central Bank Independence

Economic Growth

Time Series AnalysisMerkez Bankası Bağımsızlığı

Ekonomik Büyüme

Zaman Serisi Analizi

Issues

Article Details

CENTRAL BANK INDEPENDENCE AND ECONOMIC GROWTH: A TIME SERIES ANALYSIS FOR OECD COUNTRIES

Authors: Berkay Altındaş | Özgür Balmumcu | Aytaç Pekmezci | Kurtuluş Bozkurt

Publisher: Zonguldak Bulent Ecevit University

Main Topics: Zaman Serileri Analizi | Büyüme | Para-Bankacılık

Journal: Uluslararası Yönetim İktisat ve İşletme Dergisi Vol.21 Issue 1, pp.367-390

Document Type: Article

Publication Date: 3/2025

Document Language: Turkish

Document ID (Org No.): 2001343604

pISSN: 2147-9208

Central Bank Independence

Economic Growth

Time Series AnalysisMerkez Bankası Bağımsızlığı

Ekonomik Büyüme

Zaman Serisi Analizi

Issues

Authors:

Berkay Altındaş | Özgür Balmumcu | Aytaç Pekmezci | Kurtuluş Bozkurt

Publisher:

Zonguldak Bulent Ecevit University

Main Topics:

Zaman Serileri Analizi | Büyüme | Para-Bankacılık

Journal:

Uluslararası Yönetim İktisat ve İşletme Dergisi Vol.21 Issue 1, pp.367-390

Document Type:

Article

Publication Date:

3/2025

Document Language:

Turkish

Document ID (Org No.):

2001343604

pISSN:

2147-9208