The thesis focuses on central bank independence (CBI) in 20 selected African countries over 1990-2008. Firstly, we measure the degree of CBI. Secondly, we measure the effects of CBI on macroeconomic performance. Thirdly, we measure the effects of fiscal dominance (FD) on CBI and macroeconomic performance. The thesis has 5 chapters. Chapter 1 is the introduction. Chapters 2, 3 and 4 are stand-alone related papers on CBI and macroeconomic performance. Chapter 5 is the conclusion. Chapter 1 introduces the study. We give a brief background of the study, its motivation, the main objectives and the hypotheses to be tested. We describe the innovations that we make to CBI measurement, effects of CBI on macroeconomic performance, and the effects of FD on CBI and macroeconomic performance. We highlight the key findings and notable limitations of the study. Finally, we conclude with a brief outline of the rest of the chapters namely 2, 3, 4 and 5. Chapter 2 measures CBI. We develop a comprehensive set of CBI indices. We follow the methodologies developed by Grilli et al. (1991) and Cukierman et al. (1992). Firstly, we measure CBI in legal (de jure) and in factual (de facto) terms. Secondly, we measure CBI in political terms and in economic terms. We measure factual CBI by the annual average turnover rate (TOR) of central bank (CB) governors. We use central bank Acts and their amendments as well as country constitutions (where applicable) to calculate the legal CBI indices.
The results suggest that legal CBI is low but factual CBI is high. Political CBI is low but economic CBI is high. In overall terms, both legal and factual CBI have improved from their late 1980 levels. The levels of legal CBI over 1990-2008 are slightly above what characterized developed countries in the late 1980s. Factual CBI has improved significantly in most African countries, but it still varies considerably across the countries. The variations seem to reflect different political, economic and legal conditions. The results suggest that legal CBI still deviates considerably from actual CB practices in Africa. Factual CBI seems to proxy actual CBI better than legal CBI. However, to some extent, factual CBI seems to reflect subservience of some CB governors in Africa. We conclude that African governments still need to grant their CBs, more CBI in line with modern-day CBs, world-wide. Specifically, they need to consider constitutionalizing CBI, so that it is not easily violated by some political authorities.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:wits/oai:wiredspace.wits.ac.za:10539/11653 |
| Date | 10 July 2012 |
| Creators | Mpofu, Sehliselo |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | application/pdf |
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