Abstract

Arta Pisha

Bank of Albania

ABSTRACT

This paper aims to propose a new model for measuring central bank independence. It is based, among others, on previous de jure central bank independence indices, on the European Monetary Union (EMU) pre-accession and integration requirements and central bank independence (CBI) legislations. The new central bank independence indices are called ‘Eurozone indices’, because are based mainly on European legislation. The new constructed indices have more advantages than disadvantages and might be very helpful in assessing central bank independence. They can unify the way of measuring central bank independence for many countries, based on the sophisticated legal base of European legislation. The indices can be used to measure CBI not only in the EMU and pre-accession EMU countries but also in all countries which expect to enjoy a high level of central bank independence. In this paper, ‘Eurozone indices’ are applied to measure CBI in eight South-Eastern European (SEE) countries.

Keywords: central bank independence indices, European legislation, SEE central bank independence legislation, CBI Eurozone Indices.

JEL classification: E58, E61

Acknowlegments: Special thanks are due to Shkëlqim Cani, Prof. Dr. of Economic Sciences, for his support and his very useful experience as an expert in central bank independence issues, who assisted me in preparing this paper during my M.A. thesis. I would like also to thank my discussant Eugenie Garganas for her valuable comments. The views expressed in this paper are those of the author and do not necessarily reflect those of the Bank of Greece and the Bank of Albania. I alone am responsible for the remaining errors and omissions.

Correspondence:

Arta Pisha

Statistics Department

Rruga e “Dibrës”

“Halili” Complex, 4th Floor

Tirana, Albania

Email: apisha@bankofalbania.org