The Actual Independence of the Governors of the Central Bank of Iraq and its Effects on Inflation for the Period 2003-2017

Abstract

This research presents indicators that were used In estimating the independence of the Central Bank of Iraq, which distinguish between the law independence (de jure autonomy) and the actual independence (de facto autonomy) for the three central bank governors for the period 2003-2017, through the turnover rate index of governors (TOR). The research also provides a new indicator of the turnover rate of members in the executive authority in Iraq for the same period, and the effects on inflation. The study also outlines a set of behavioral indicators ​​for governors that highlight the effects of actual independence on inflation.
 The main findings of the research were that the actual independence, in terms of the turnover rate index, gradually decreased for the research period, but the behavioral indicators of the governors showed that they maintain price stability. Therefore, the study presents evidence on the effect of the actual independence on inflation, because of the control of the exchange rate through the foreign currency auction and the decline of foreign reserves.