Central Bank Independence, Wage-Bargaining Structure, and Macroeconomic Performance in OECD Countries.

The impact of central bank independence and wage-bargaining structure on inflation and unemployment is explored theoretically and tested empirically for a sample of seventeen OECD countries over two separate periods. The results suggest that inflation is lower in economies with greater central bank independence and that the equilibrium unemployment rate depends on the structure of the labor market. Greater central bank independence does not appear to be associated with higher unemployment. Copyright 1996 by Royal Economic Society.