Central banks and growth
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This dissertation comprises two essays on central banking. In Chapter 2, I introduce and empirically test the central bank curse hypothesis, a tendency for large central banks to hinder growth. Using cross-sectional and panel evidence over the years 1960-1995, I find some evidence supporting a central bank curse. Yet it is not universal: large central banks harm growth in developing countries, whereas their effect on growth in developed countries is not statistically significant. I also find that the level of corruption, at least partly, explains the central bank curse in developing countries. In Chapter 3, I document and measure the degree of independence, accountability and transparency of the National Bank of Azerbaijan (NBA) using various indexes from the literature. I find that although the most recent law on the NBA has notably raised its degree of legal independence, the actual independence of the NBA leaves much to be desired. I propose a list of policy measures aimed at enhancing actual independence of the NBA.