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Central Bank Independence and its Effect on Inflation Performance in the ESCWA Countries

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The main objectives of this paper are to measure the central bank independence in the ESCWA countries and to explore its effects on the inflation performance. In section two, the paper reviews major relevant works in the literature. In section three, it presents the methodologies followed in this study, as well as the obtained measurements of central bank independence. Sections four and five, explore the relationship between the ESCWA member countries’ central bank independence and inflation rate levels and volatility respectively. Section six, diagnoses the weak legal provisions that contribute to a low degree of central bank independence and provides policy recommendations to amend specific provisions that the paper has classified as legally weak. Finally, section seven includes the conclusion.