The Direct and Indirect Role of Institutional Factors in the Independence of Central Bank of Iran

Document Type : Research Paper

Authors

1 Ph.D. Student, Department of Economics, Faculty of Administrative Sciences and Economics, Isfahan University, Isfahan, Iran.

2 Postdoctorate, Department of Economics, Faculty of Social and Economic Sciences, Alzahra University, Tehran, Iran

10.22051/ieda.2024.45583.1386

Abstract

According to the literature on institutionalism, institutional factors play an important role in the central bank's independence. The current research aims to investigate the direct and indirect impact of institutional factors on the central bank's independence in Iran's economy. Therefore, using an econometric model based on the studies of Garriga and Rodrigues (2023) and Dimato et al. (2009), the effect of institutional factors on the central bank's independence during the period of 1996-2021 has been investigated. Also, in this study, the interaction of the model's independent variables has been investigated to analyze the indirect effects of institutional factors on the central bank's independence. The research results show that although oil rent does not directly affect the independence of the central bank, it indirectly (through corruption and inflation) causes a decrease in the central bank's independence, which indicates the weakness of the institutional quality and policies. Based on the findings of the present study, the interaction of institutional factors and the quality of institutional mechanisms should be considered in economic policies to achieve an independent central bank

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References

منابع
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Iranian Economic Development Analyses
Volume 9, Issue 2 - Serial Number 24
October 2023
Pages 193-218

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