Economic policy responses to the COVID-19 pandemic: The role of central bank independence

Elgin C., YALAMAN A., Yaşar S., Basbug G.

ECONOMICS LETTERS, vol.204, 2021 (SSCI) identifier identifier identifier

  • Publication Type: Article / Article
  • Volume: 204
  • Publication Date: 2021
  • Doi Number: 10.1016/j.econlet.2021.109874
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Public Affairs Index, zbMATH
  • Keywords: COVID-19, Central bank independence, Monetary policy, Fiscal policy
  • TED University Affiliated: Yes


Is central bank independence (CBI) associated with economic policy responses to mitigate the adverse economic effects of the COVID 19 pandemic? In this paper, we provide cross-country evidence that it does. Our results generally indicate that more independent monetary policy authorities have adopted smaller cuts in the policy rate and reserve requirements. However, fiscal and macro-financial packages are relatively larger in countries with more independent central banks. These results are robust to different sets of control variables and different econometric specifications that include an instrumental variable estimation. (C) 2021 Elsevier B.V. All rights reserved.