Best Article Award: Hueng
Virgo, Katherine S., Atlantic Economic Journal
The Atlantic Economic Journal is proud to announce that the winner of the Best Article Award is C. James Hueng of Western Michigan University. His paper, entitled, "Central Bank Behavior and Statutory Independence," appeared in the June 2012 issue of the AEJ. A distinguished committee reviewed all eligible papers published in that same year. The committee was chaired by IAES Vice President Asli Demirguc-Kunt of the World Bank. Members of the committee included the AEJ Board of Editors and IAES Endowment Fund Sponsors. The Managing Editor gratefully acknowledges the participation and diligence of all committee members who participated in the review process. The award emphasizes the intellectual and scholarly approach to economic research which has always been a focal point of the AEJ.
This novel paper integrates the policy reaction function literature with the literature on central bank independence (CBI). The paper compares "what central banks actually do as opposed to what they are legislated to do."
The majority of empirical research on the time inconsistency model has been devoted to testing the relationship between economic performance and the degree of central bank independence measured by various CBI indices, such as the legal CBI. However, the distant link between institutional designs and economic performances complicates testing the relationship between the two due to endogeneity and the missing-variable issues. For this reason, the paper focuses instead on a more direct link between CBI indices and the central bank behaviors, and analyzes which aspects of the legal CBI are more consistent with central bank behaviors. …