DE JURE OR DE FACTO CENTRAL BANK INDEPENDENCE? WHAT TRULY CURBS INFLATION IN MOROCCO: EVIDENCE FROM BANK AL-MAGHRIB
DOI:
https://doi.org/10.31000/combis.v8i1.15836Abstrak
Amid increasing concerns about inflationary pressures and institutional reforms in emerging economies, understanding the effectiveness of central bank independence has become particularly crucial. This study aims to evaluate the extent to which de jure and de facto central bank independence contribute to inflation control in Morocco, with particular emphasis on the roles of legal autonomy and governor stability in shaping monetary outcomes. Using annual data from 1988 to 2024, de jure independence is measured using a PCA-based synthetic index, while de facto independence is proxied by governor turnover. The relationship between independence and money supply growth, used as an indirect channel of inflation, is examined using an Autoregressive Distributed Lag (ARDL) model to capture both short and long-run dynamics. The findings reveal a long-run cointegrating relationship among money supply, legal independence, and turnover. De jure independence significantly reduces long-run monetary expansion, whereas governor turnover affects only short-run monetary tightening. By jointly examining legal and actual independence using a composite index and updated data, this study provides new empirical evidence for Morocco and offers policy-relevant insights for emerging economies seeking sustained monetary discipline.
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