The Autonomy of the Central Bank of Chile Twenty Years on

Abstract

In recent decades, the number of independent central banks has grown steadily. In Chile, autonomy was adopted twenty years ago. This paper discusses the reasons why central bank independence is convenient for the economy, together with the importance of transparency as a complementary feature. Finally, some results are presented, particularly for the Chilean case, that illustrate how adopting autonomy resulted in lower and more stable inflation rates and a smoother business cycle.