| This dissertation investigates the effects of central bank independence (CBI) on monetary policy effects, especially, liquidity effects. Chapter I offers a survey of previous studies and the ideas of this thesis. Chapter II examines the variable indexes for CBI and investigates the relationship between CBI and inflation in developing countries as well as in developed countries. It is found that there is a significant negative relationship between CBI and inflation in developed countries but not in developing countries. It is argued that the levels of CBI in developing countries are too low to have an impact on the economy. Chapter III finds an implication for the relationship between CBI and monetary policy effects with the basic liquidity model. Then it applies the traditional econometric approaches to find the empirical results. It is shown that the higher CBI can result in the stronger monetary policy effects. For more correct identification, Chapter IV constructs both non-structural and structural vector autoregression (VAR) models to examine the effects. The non-structural VAR models confirm the positive effects of CBI on the monetary policy effects while the results from the structural VAR models are not significant. Chapter V summarizes the conclusions of this study. |