Revisiting the institutional determinants of central bank independence

Reform towards greater central bank independence is generally seen as intertwined with institutional development more broadly. However, the largest empirical study to date on the determinants of central bank independence found a negative relationship to institutional quality variables. This paper argues that this is related to sample length: using a different dataset for central bank independence with a considerably longer sample, institutional variables are found to be positive and highly significant determinants of central bank independence.