02061cas a2200241 a 4500 AALejournalIMF001383 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451843743 1018-5941 BD-DhAAL BD-DhAAL Musalem Borrero, Alberto. On the Long and Short of Central Bank Independence, Policy Coordination, and Economic Performance / Alberto Musalem Borrero. Washington, D.C. : International Monetary Fund, 2001. 1 online resource (25 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper examines the implications of central bank independence for equilibrium macroeconomic performance. The focus is on institutional arrangements governing financial relationships between central banks and ministries of finance, in the presence of competing objectives and constraints across institutions. Abstracting from long-run considerations, higher central bank independence increases fiscal discipline and results in lower inflation and growth, generating a short-run institutional Phillips curve. In the presence of sufficiently strong negative long-run externalities of inflation onto growth, higher CBI also increases fiscal discipline and generates lower inflation, however, it also yields higher growth and generates an inverted institutional Phillips curve. Strikingly, higher central bank independence is found to be frequently sub-optimal for a wide set of stylized economies. Whether these economies are empirically relevant is an open question. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2001/019 Full text available on IMF http://elibrary.imf.org/view/journals/001/2001/019/001.2001.issue-019-en.xml IMF e-Library