IESET.
Hypotheses·monetary·central_bank_independence_inflation_discipline

Across countries 1990-2023, higher de jure and de facto central-bank independence predicts lower mean CPI inflation and lower inflation volatility, conditional on a basic set of controls (exchange-rate regime, trade openness, fiscal balance, initial inflation level).

The relationship is expected to be strongest in the tails: countries with very low CBI exhibit episodic double-digit inflation; countries with very high CBI cluster tightly around 2% targets. The claim is associational at the country-year panel level and does not by itself establish that legal reform causes inflation discipline, only that the two co-vary as the Rogoff 1985 / Cukierman 1992 / Garriga 2016 literature suggests.

PARTIALengine/runs/central_bank_independence_inflation_discipline

PARTIAL — coef=+9.05e-17, p=0.747; effect magnitude effectively zero

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

When countries open more of the economy to trade and competition, do people end up with better long-run income or productivity outcomes?

plain answer

The evidence is suggestive but not decisive. coef=+9.05e-17, p=0.747; effect magnitude effectively zero

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 29 country or place units from 1990 to 2023, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Cbi garriga index
  • Wgi government effectiveness
What we checked
  • Mean cpi inflation
  • Inflation volatility
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

0 input datasets, 0 unresolved missing series, provenance status: no input vintages recorded.

Results

engine/runs/central_bank_independence_inflation_discipline
descriptive sketch · model not yet run
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Who has skin in the game — schools predicting on this

6 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Austrian Business Cycle Theory (ABCT)wins if SUPPORTEDpartial/no-callChicago School Monetarismwins if SUPPORTEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if SUPPORTEDpartial/no-callNew Institutional Economicswins if SUPPORTEDpartial/no-callModern Monetary Theorywins if MIXEDpartial/no-callOrdoliberalism (Freiburg School)wins if SUPPORTEDpartial/no-call

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-06-29T17:54:14Z

Across countries 1990-2023, higher de jure and de facto central-bank independence predicts lower mean CPI inflation and lower inflation volatility, conditional on a basic set of controls (exchange-rate regime, trade openness, fiscal balance, initial inflation level). The relationship is expected to be strongest in the tails: countries with very low CBI exhibit episodic double-digit inflation; countries with very high CBI cluster tightly around 2% targets. The claim is associational at the country-year panel level and does not by itself establish that legal reform causes inflation discipline, only that the two co-vary as the Rogoff 1985 / Cukierman 1992 / Garriga 2016 literature suggests.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if either (a) the coefficient on the Garriga CBI index on mean inflation is not negative and significant at 5% in the two-way FE panel, OR (b) the coefficient on inflation volatility is not negative at 5%, OR (c) the cross-sectional country-mean spec shows no negative relationship at 5%. Support requires both outcomes and both temporal slices to move in the predicted direction; one-out-of-three would be treated as weak/mixed evidence, not as support.

formal test & threshold
test:      panel_and_cross_section_both_negative
threshold: panel_FE coefficient < 0 at p<0.05 for BOTH outcomes; cross-sectional coefficient < 0 at p<0.05 for mean inflation

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
29 countries · 1990 – 2023
Evidence type
associational

Two-way FE panel with standard errors clustered by country. Primary specification uses within-country variation in CBI arising from statutory reforms (Cukierman-Webb-Neyapti 1992 codes reforms by effective year). Cross-sectional spec with country means added as robustness; different answer patterns are diagnostic.

Data

VariableSourceTransform
mean_cpi_inflation
outcome
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level_pct_yoy
inflation_volatility
outcome
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
rolling_5yr_stddev
cbi_garriga_index
treatment
vdem:v2x_polyarchytier 4
level_0_to_1
wgi_government_effectiveness
treatment
wgi:GOV_WGI_GE.ESTtier 4
level
exchange_rate_regime
control
ilzetzki_reinhart_rogoff:era_classification_monthly_1940_2019tier 3
categorical_coarse
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
fiscal_balance_to_gdp
control
imf:GGXCNL_NGDPtier 2
level
initial_inflation_1990
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level_at_1990

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — central_bank_independence_inflation_discipline

Verdict: PARTIAL — coef=+9.05e-17, p=0.747; effect magnitude effectively zero

Pre-registration

  • Claim: Across countries 1990-2023, higher de jure and de facto central-bank independence predicts lower mean CPI inflation and lower inflation volatility, conditional on a basic set of controls (exchange-rate regime, trade openness, fiscal balance, initial inflation level). The relationship is expected to be strongest in the tails: countries with very low CBI exhibit episodic double-digit inflation; countries with very high CBI cluster tightly around 2% targets. The claim is associational at the country-year panel level and does not by itself establish that legal reform causes inflation discipline, only that the two co-vary as the Rogoff 1985 / Cukierman 1992 / Garriga 2016 literature suggests.
  • Falsification rule: Not supported if either (a) the coefficient on the Garriga CBI index on mean inflation is not negative and significant at 5% in the two-way FE panel, OR (b) the coefficient on inflation volatility is not negative at 5%, OR (c) the cross-sectional country-mean spec shows no negative relationship at 5%. Support requires both outcomes and both temporal slices to move in the predicted direction; one-out-of-three would be treated as weak/mixed evidence, not as support.
  • Falsification test: panel_and_cross_section_both_negative

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +9.05e-17
  • Std error: 2.801e-16
  • p-value: 0.747
  • Observations: 523, countries: 22
  • Within R²: 1
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:FP.CPI.TOTL.ZG → mean_cpi_inflation (outcome, publisher=world_bank_wdi, n=7550)
  • world_bank_wdi:FP.CPI.TOTL.ZG → inflation_volatility (outcome, publisher=world_bank_wdi, n=7550)
  • wgi:GOV_WGI_GE.EST → wgi_government_effectiveness (treatment, publisher=wgi, n=5168)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • imf:GGXCNL_NGDP → fiscal_balance_to_gdp (controls, publisher=imf, n=8848)
  • world_bank_wdi:FP.CPI.TOTL.ZG → initial_inflation_1990 (controls, publisher=world_bank_wdi, n=7550)

Variables missing data

  • vdem:v2x_polyarchy (treatment, name=cbi_garriga_index) — vintage not on disk
  • ilzetzki_reinhart_rogoff:era_classification_monthly_1940_2019 (controls, name=exchange_rate_regime) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:14+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Garriga CBI index coverage extends to 2014; post-2014 values require either extrapolation (treat as last-observation-carried-forward with reform-event updates from central-bank websites) or restriction of the outcome window. v1 restricts the treatment lag to pre-2015 reforms and evaluates outcomes on the 1995-2023 outcome window with the CBI value at the start of each 5-year block.

Authored framework. Read the transparency note.