Terrorism Essay Example | Topics and Well Written Essays - 1250 words - 2

Terrorism - Essay Example Analyzing Different Types Of Terrorism Introduction Based on the execution and effects of terrorist behavior, acts of terror do not just happen; they are well thought and planned. All terrorist behavior is based on extremist beliefs and intolerance towards contrasting interests (Martin, 2009). Although almost all acts of terror are based on political motives, extremism is very divergent depending on the belief systems of the concerned terrorists, thus the existence of different types of terrorism. Left-Wing Versus Right-Wing Terrorism In almost all political systems, there are conflicting views on how the system should be run. There are those factions that support the preservation of traditional values, while other factions advocate for new methods of administration. According to Martin (2009), right-wing extremists are those who believe that the values that led to past glory have been eroded by enemy culture. As a result, rightists often use aggressive measures to preserve these cul tures and cement their status. On the other hand, left-wing extremists act aggressively towards establishing a new order by first destroying the current system. Most leftists believe that they have been oppressed by the existing regime, thus the need to create a just and fair regime. Ideally, leftists consider themselves the voice of the oppressed and engage the rightists in aggressive politics in order to establish a new system. Consequently, rightists respond through terrorist violence in an attempt to safeguard the ideals and order of the group. Pitcavage (2001) gives the example of the militia movement, a paramilitary rightist group that arose in the United States during the 1990s. This movement advocated for the right of every individual to own a gun in order to protect themselves from a tyrannical government. The militia movement claimed that the federal government was creating a conspiracy to rob citizens off their rights and exercise more control over them. To this end, the rightist believed that the government through the police unit was creating security incidents and using the same to increase government power over the people. Moreover, the militia believed that the United States government was colluding with the United Nations to establish a tyrannical regime under the â€Å"New World Order.† Generally, the militia movement would act with hostility towards the federal government. The militias would attack U.S military bases believed to be training troops from the United Nations. In addition, the militias would manufacture illegal weapons and use the same to confront federal authorities (Pitcavage, 2001, p. 971). Martin (2009, p. 254) gives the example of the â€Å"Battle of Seattle† that was organized in 1999 by leftists to protest against globalization. The leftist protestors believed that globalization would limit the role played by each culture in the world, thus bringing about anarchy. However, according to Martin (2009, p. 254), left-wing terrorism has been gradually decreasing since the end of Marxism. State Terrorism State terrorism occurs when states decide to act violently towards international or domestic adversaries. In the international arena, a state may choose to use aggression and violence to

Rehabilitation Of Offenders In British Criminal Justice System Criminology Essay

Rehabilitation Of Offenders In British Criminal Justice System Criminology Essay The modern day criminal justice system in Britain is geared at the rehabilitation of offenders so the prison system is not only a means of incarceration to remove the offender from posing any danger to the public, but also a vehicle for preparing the offender for release and re-integration into society. The Criminal Justice Act 2003 (which has been amended by the Criminal Justice and Immigration Act 2008) sets out the criteria for dealing with dangerous offenders and is important to the court for sentencing purposes. Dangerous offenders are identified by reference to the commission of specified violent and sexual offences set out in Schedule 15 of the Criminal Justice Act. That Act says that a court must determine whether there is a significant risk to members of the public of serious harm by the commission by him of further offences (Criminal Justice Act, S 229). In a recent case the Court of Appeal held that in determining dangerousness the court was not confined to considering only admissible evidence and could consider, as it did in the case, an alleged history of violence although the offender did not have convictions (R v Considine and Davis, 2007). Public protection was enhanced under the Criminal Justice Act by the introduction of a sentence of imprisonment for public protec tion which ensures that certain offenders are not released until the Parole Board determines that it is safe to do so. Problems arise because although the term dangerous offender is used in a general way it is in fact extremely difficult to predict who is dangerous as individuals vary in their behaviour. Not only do individuals vary as between each other so that there are differing degrees and shades of dangerousness but also, on an individual basis, the scope for carrying out dangerous and violent acts may vary on a daily basis. The notion of dangerousness is therefore extremely complex in itself and is capable of shifting on an individual basis whereby assessing and predicting future behaviour can be compared to attempting to mould soft sand into a permanent form. Human nature can be fundamentally and inherently unpredictable even among stable law abiding individuals, so when mentally unstable people are added to the melting pot, the decision as to assessing their dangerousness becomes more complex. In the UK, policies addressing those with dangerous and severe personality disorders (DSPD) has expanded considerably in recent years against a background that people with personality disorders should not be precluded from accessing services available to the rest of society. The DSPD programme deals with patients who have the most severe personality disorders. The DSPD programme offers an intensive multi disciplinary treatment programme based on individual need and comprising a cognitive-behavioural group-based intervention approach with opportunities for social interaction, in ward-based community meetings for example. Specific treatment includes offence-specific groups, such as sex offender group and violence reduction programmes. There has been a shift of policy from placing people with DSPD in prisons into secure hospitals with the National Health Service taking a more active role in providing treatment. A smaller number of medium secure and community places have been programmed, but so far the implementation has fallen behind target and the rehabilitation of DSPD patients back into the community remains extremely challenging. Evaluation of the DSPD programme is a work in progress and the impact of this policy on reoffending rates remains to be deduced. Persons assessed as having DSPD must be detained for treatment and discharge from detention is dependent upon a test of public safety as against favourable responsiveness to treatment. The link between dangerous behaviour and mental illness remains embedded in public opinion despite the attempts of mental health practitioners to highlight the absence of such a connection. A study of public opinion towards schizophrenia found that 70% of respondents view this group as dange rous (Crisp et al, 2001). Regarding treatment in the community following release from prison or hospital, Leung cites the European judgment of W v Sweden 1988, in which compulsory medication on discharge from hospital was not a deprivation of liberty and would not impinge Article 5 of the European Convention on Human Rights (Leung, 2002). Prison population has increased dramatically over the last fifteen years from circa 43,000 at the start of the 1990s (Home Office, 2005a) to in excess of 80,000 today. Although there are numerous reasons given to explain this startling increase, the focus of the public on dangerousness is one such explanation. In 2006 a review was conducted which claimed that prison was the best place for dangerous offenders as it stopped them from re-offending (Home Office, 2006a, p. 32). In 2007 with the creation of the Ministry of Justice the preceding approach to detaining dangerous offenders for a long time did not change. On the contrary, the newly formed Ministry reiterated that prison places are available to protect the public from dangerous offenders (Ministry of Justice, 2007, p 4). The 1990s preoccupation with public protection shaped the policies of protecting the public from the risk of serious harm arising from violent offenders and the aim of responding more effectively to the risk of paedophiles and the increase in child sex abuse (Grubin, 1998) Within the UK the population is generally extremely fearful of the level of violent and sexual crime (Ditton Farrell, 2002; Kemshall, 2003). The focus on this type of crime has been exacerbated by the media and even when crime rates are shown to be falling, the public perception is that they are living in a more violent society. Dangerousness has therefore been widely used to describe an increasing amount of offences and has been accompanied with an expectation of more punitive sentences to deal with the increase. Barbara Hudson asserts that there has been a significant shift from doing justice to controlling risks as the goal of law and order and penal strategies (Hudson, 2002; p 101). The modern society is characterised by the increasing scope and influence of the mass media. The far reaching scrutiny of the global mass media means that the negatives of modern society are reported and in terms of criminal justice, its failings can be exposed. Such exposure is accompanied by cynici sm towards expert opinions and the positive effects of legislation (Garland, 2000). Garland (2001, p178) has described the space between the community and prisons as having become more strictly enforced stating that Those offenders who are released into the community are subject to much tighter control than previously and conditions that continue to restrict their freedomà ¢Ã¢â€š ¬Ã‚ ¦.the community into which they are released is actually a closely monitored terrain, a supervised space, lacking much of the liberty that one associates with normal life. Commenting on a Panorama programme broadcast in 2006, HM Chief Inspector of Probation said he thought the programme made a fair point when he said that general talk of close supervision and monitoring of offenders can give a misleading impression to the public of the extent of measures taken to prevent them (Bridges, 2007). It is clear in the early stages of this essay that there are different views on the nature and extent of monitoring to which dangerous offenders are subjected on their release from prison. Academics like Garland above consider the measures stringent, tantamount to imprisonment within the community, whereas the enforcers of those measures, probation workers, maintain that it is unhelpful to make it sound as if community service is prison in the community which it plainly is not (Bridges, 2007 p 4).

Influential Event :: essays papers

Influential Event Experience is what you receive when you don’t get what you want." I remembered my father’s words as I tried to postpone the coming massacre. Like during the fall of the Roman Empire, my allies became enemies and my foes turned into partners. In fast and furious action with property changing hands again and again, I rested my fate on the words of one man, hoping he would rescue me from this dangerous tailspin. Don’t these experts realize the heartbreak they’re inflicting on my young life? While the uncertainty of tomorrow’s attire is the most pressing concern for many seventeen-year-olds, I must worry about much greater issues! It’s August 31,the market is down over 300 points and the value of my stock portfolio is falling fast. Usually, whenever I mention the words stockbroker or investment other students snicker that I’m actually interested in â€Å"that stock market stuff." My interest in investing began when as a naà ¯ve freshmen I learned that my assistant JV basketball coach Tom Wingfield worked with Dean Witter as a stockbroker. Over the course of the season, I expressed interest in his job, and we became inseparable. Tom became my mentor, and I absorbed every word he spoke. Almost immediately, I became infatuated with the market and wanted to invest every penny I have. To the delight of my fifteen-year old brother, before school I even found myself opening the newspaper directly to the business section, giving my brother first rights to the sports page for the first time in his life. Hoping to soon enter the market, I worked at a nearby retirement home for several months and earned a little money. To help me buy more stock, my father agreed to match any amount of money I invested. I told Tom about the plan, and he thought it was fantastic. The next day, I had a stock portfolio and dreams of retiring by age 30. Three years have elapsed since that fateful November morning, and every two weeks I religiously place part of my retirement home paycheck into the market. Every small-time investor probably dreams of making a million dollars; I was no different. I pictured my meager investments taking off and my becoming a professional trader. August 31 quickly jolted me back to reality, and I was reminded of that infamous expression my father told me. No one really plays the market for experience; that’s just what people say after losing money.

How to Write a Persuasive Essay

English 1021 Diagnostic Essay Some people believe that writing an essay is extremely hard. They are wrong. If you have the correct information, time, and a cup of coffee you should have no problem. There are many different types of essays, for example, an informative essay, a research paper, or a persuasive essay. Although they all have a different overall theme and purpose for being written, they all have the same outline for how exactly to write it. No matter what you always start off with an introduction, then you move to your supporting paragraphs, and end with a conclusion.Here is the in depth breakdown of what a proper informative research paper should included. First thing’s first, you must always have a topic. The topic of your paper is the focus, the area that you have researched and explored. Once you find your topic, you must make sure that you have sorted out all of the available information. Topics are not always easy to find. There are some that you should avoid using such as topics based solely on one single source, and topics that are brand new or overly broad.Now that you have your topic, you must brainstorm and narrow down the topics to create and issue. The issue of the paper is the question that you are asking. When creating your issue, make sure the avoid issues that can be easily answered by just one single source. Another thing that you need to come up with is a hypothesis or tentative claim, a proposition made as a basis for reasoning, without any assumption of its truth. Test the hypothesis as you continue to research.By having a claim, you can prevent yourself from being overwhelmed by the information that you are finding. Now that you have come up with a topic and claim, you are ready to begin your research and essay. The next step of this process is to direct your essay to your audience. Ask yourself some questions. How much does my audience know about this topic? What are my readers’ expectations, interests, and needs concerning this issue? What evidence have I come up with that will inform them?Once you have asked yourself those questions it is time to start using your sources. Some of the best sources are newspapers, and books. If you are going to use the internet, which most of us do, be careful with the credibility of what you find. Once you have found a source that you believe fits your topic well, ask yourself some questions and see if the criteria of the source meets it. Is this recent information? Is the author credible or an expert on this subject? Does this information seem thoughtful and relative to the topic?Is this evidence reliable? When dealing with web sources make sure that they contain an author or are hosted by a respectable site such as a library, university, or an official association. Now that you have found your sources, it is time to continue. Taking notes on sources can sometimes be difficult. Write down some of the things that jump out to you about the topic that might b e useful. Another thing that you must write down are the page numbers that you are getting the information from.Make sure to think about why you chose to write down a particular idea and always differentiate your ideas and words from that of your source. Never forget to use quotation marks for direct quotations. Your next job is to draft your research paper. Refine your thesis as much as needed. Figure out based on your information where each source may fit in. When writing your draft, avoid using your own comments to hold together another persons idea. Now it is time for you to construct your own essay using the secondary sources that you have found to support your claims.Some things that you may need to know are how to use a summary, paraphrase, and quotation. A summary of something gives a main idea or supporting points. It is short and focuses on the main points to provide background or general support for your point. Paraphrasing put the information that you have found into new words to make sure that you and your audience understand the original information more clearly. A quotation records the exact punctuation and wording of the source that you have received it from and encloses it in quotation marks.You can use quotations when an author’s words are extremely vivid and stand out to you or when the words of that particular reliable authority would lend support to your paper. Now that you know how to summarize, paraphrase, and quote, it is imperative that you do not plagiarize. To avoid plagiarism, document everything you have learned from your sources including their language and ideas. If you express their ideas in your own words you must still give them the credit and documentation. The only exception to this is when something is common knowledge.Now that you know all of the do’s and dont’s of an informative research paper it is your turn to put them into effect. The hardest thing about an informative research paper is finding a t opic and making sure that your sources and information are credible and relative to the topic at hand. Once you have found all of the correct and credible sources for your topic you are ready to write away. Like I said earlier, many people believe that writing a research paper is extremely hard, but if you follow these steps and advice, you will never fail at writing an informative research paper.

The Better Self in Ourselves

The influx of self-help books in today’s ultra-modern world is by no means an accident. They are by-products of a world that has become more complicated and complex as the ways in which it has to be lived in. This complexity coincides with the development of more complex thought processes that seek to find meanings in life and how everyone fits into that life. That search for meaning and the process of meaning-making involve attempts to make sense of the existence of one’s self as a tiny spot relative to the vastness of the cosmic universe.This has led many social scientists to develop theories that attempt to explain ways through which the self can be understood in its multi-faceted contexts. John Locke underscored the importance of the â€Å"continuity of consciousness† through an enabled memory and imagination (Stanford Encyclopedia of Philosophy, 2007). He believed that a person can understand his/her self by examining the past and imagining the future. Jean- Jacques Rousseau, on the other hand, stressed the significance of the society as a necessary and yet corruptible element in understanding one’s self (Stanford Encyclopedia of Philosophy, 2008).The former emphasizes the objective self-examination while the latter stresses the subjective self-expression. Sigmund Freud believed that human beings have irrational, primitive and animalistic instincts that should be repressed for the betterment of one’s self and the society at large (Curtis, 2002); while Wilhelm Reich claimed that it is the repression of the society of the â€Å"original† forces and emotions within human beings that makes human beings irrational (The Wilhelm Reich Museum).And quite contemporarily, Ian Hacking advances the practice of disciplinary psychology as a means to define selfhood in its socio-cultural contexts (Hacking, 2002). It has offered individuals the tools through which they can take a deeper look at their inner selves in relation to the society and the world they live in. Towards a Better Understanding of the Self in Ourselves All the psychological theories and practices cited thus far have only one aim: to make us understand ourselves more than how we understand ourselves now.They provide us tools so we can acquire skills to help us learn more about ourselves and to nurture that self within ourselves for a better us. Their primary objective is to illuminate the existence of one’s self and give us enlightenment to enable us to view that self in new and better perspectives and vantage points with the hope that we can be better for ourselves, the people around us and the society we live in. Disciplinary psychology posits that if we could understand our psychological self better, we can understand the kind of person that we are.Doing so, we can be that person we aspire to be. We can be astronauts, airline pilots, NBA superstars, forensic scientists, geologists, etc. There are infinite possibilities of being who we want to be if we just indeed are able to understand ourselves better. Truly, while there are infinite possibilities of being ourselves, there are also infinite questions that needed to be answered about ourselves. As time changes and as the world becomes more modernized, the concepts of personhood and selfhood become even more complicated.Questions about humanity become more apparent. When we question why we are driven by this desire to succeed and gain more material wealth, we turn to become pseudo-psychoanalysts in trying to understand this desire and how it can manipulate us if not tempered with reason. And as our consciousness is feed with the commercialism we see around us, engendered by the consumerism in the media, we are guided by the fact that advertisements use psychoanalysis to manipulate human minds to become infatuated with manufactured desires.We are reminded of the â€Å"police within our heads that needs to be destroyed† (Curtis, 2002). When we question ou r temperaments and attitudes towards love, life and work, we may turn to looking back at how we were brought up, the environment we grew up with and the kind of upbringing that we had. Disciplinary psychology guides us to look back and look forward and struggle to find meanings in those acts. Indeed, while disciplinary psychology offers us tools to gain better understanding of ourselves, the synthesis depends on our own willingness to analyze.While it can provide us maps to where we could finally go, the choices of directions we take remain our own pre-occupation. And while it gives us patterns through which we could build our own conceptions about ourselves, our self-concept remains our own decision. In the final analysis, disciplinary psychology can provide us proper guidance, but the path towards better understanding of one’s self depends on our own will to tread that path forcefully and purposefully. And as always, that willingness can be questioned psychologically.

We are all Federalists we are all Republicans essays

We are all Federalists we are all Republicans essays Federalists and Republicans were the first two political parties in the United States. Federalists believed in a strong central government, a strong army, industry, and loose interpretation of the Constitution while Republicans believed in a weak central government, state and individual rights, and strict interpretation of the Constitution. Despite the inaugural address made by Thomas Jefferson, We are all Federalists, we are all Republicans, domestic and foreign policies of Thomas Jefferson have showed that he only supported the Republicans. To force Britain to give the United States favorable commercial terms, Jefferson advocated an Embargo Act against that country, which prohibited American ships from sailing to any foreign port. The Kentucky Resolution was a protest against the Alien and Sedition Acts passed by Congress. Louisiana Purchase was the greatest real estate deal in history. Embargo Act was a law that prohibited United States vessels from trading with European nations during the Napoleonic Wars. Passed by Congress in December 1807 over Federalist opposition and at the behest of President Thomas Jefferson, the Embargo Act was a response to restrictive measures imposed on American neutrality by France and Britain, at war with each other. Specifically, Napoleon sought to blockade his foe by forbidding any nation to trade with Britain. The latter retaliated by banning neutral trade with France and its allies. Vessels violating either the French or British blockades would be seized; thus, the neutral U.S. risked the loss of merchant ships to both sides. To pressure the belligerents to respect neutral rights and to demonstrate the value of trade with the U.S., Jefferson responded with the embargo instead of open warfare. In U.S. history, resolutions passed in opposition to the Alien and Sedition Acts, which were enacted by the Federalists in 1798. The Jeffersonian Republicans first replied in the...

Free Essays on Gender Differences in Communications

don’t work as they expected, or even spark resentment and anger. Both women and men could benefit from learning each other’s styles. Many women could learn from men to accept some conflict and differences without seeing it as a threat to intimacy, and many men could learn from women to accept interdependence without seeing it as a threat to their freedom. This paper will evaluate the differences between genders in communication. Part of the study consists in showing that those differences are due to the differences between men and women of course, but that they are also very dependent on the environment into which the conversation takes place. Many cross-gender communication studies only examine verbal communication between a man and a woman, disregarding the environment and therefore fail to completely isolate the interlocutors. An interlocutor is one who takes part in a conversation. The first part of the paper will examine why there is a need to understand gender communication, and the relation between different world-views and gender communication. The second part of the paper will ... Free Essays on Gender Differences in Communications Free Essays on Gender Differences in Communications Gender Differences in Communications Gender communication is communication about and between men and women (Ivy and Backlund, 1994). Recognizing gender differences in communication enables both sexes to communicate better with each other. According to Deborah Tannen, (1992, p 17), many women and men feel dissatisfied with their close relationships and become even more frustrated when they try to talk things out. There are gender differences in ways of speaking, and a need to identify and understand them. Without such understanding, we are doomed to blame others or ourselves-or the relationship- for the otherwise mystifying and damaging effects of our contrasting conversational styles. Pretending that women and men are the same hurts women, because the ways they are treated are based on the norms for men, and are nonplussed when their words don’t work as they expected, or even spark resentment and anger. Both women and men could benefit from learning each other’s styles. Many women could learn from men to accept some conflict and differences without seeing it as a threat to intimacy, and many men could learn from women to accept interdependence without seeing it as a threat to their freedom. This paper will evaluate the differences between genders in communication. Part of the study consists in showing that those differences are due to the differences between men and women of course, but that they are also very dependent on the environment into which the conversation takes place. Many cross-gender communication studies only examine verbal communication between a man and a woman, disregarding the environment and therefore fail to completely isolate the interlocutors. An interlocutor is one who takes part in a conversation. The first part of the paper will examine why there is a need to understand gender communication, and the relation between different world-views and gender communication. The second part of the paper will ...

Online vs Traditional Education Essay Example | Topics and Well Written Essays - 1250 words

Online vs Traditional Education - Essay Example This paper draws a comparison and contrast between online education and traditional education. Online education and traditional education are similar in the syllabus and course structure but differ in the styles and patterns of communication between the students and instructors, flexibility in terms of schedule, extent of learning and development of skills, and the overall cost both for the school and the students. Communication on online education is very different from the way it is in traditional education. In online education, conversation is made through the exchange of messages. Messages are exchanged via keyboard, so typing errors are common to occur. Although online communication is a fairly effective means of communication, yet it is subjected to a lot of challenges. For example, the communicating parties may be interrupted in the middle of communication if the internet connection breaks. There is a lot of uncertainty in online communication. One never knows when the compute r starts malfunctioning or is attacked by a virus. However, when the computer is functioning properly and everything is set, communication is not only instant and effective, but is also time saving and cost effective. Nevertheless, a research conducted by SRI International found that â€Å"[o]n average, students in online learning conditions performed better than those receiving face-to-face instruction† (Bits, 2009). On the contrary, traditional education provides an individual with frequent opportunities of socializing with peers. Students get to meet one another on daily basis. They make gossip, share views and discuss ideas both pertinent to the school education and other social and political matters. Such group discussions are very informative. Students get to learn about new opportunities. â€Å"Traditional college students are between the ages of 18-21 and benefit from the social atmosphere that a normal college campus provides† (Carron, 2006). The face to face interaction with peers and teachers has also many psychosocial benefits for the students. It inculcates confidence in the students and enhances their emotional intelligence so that they are more prepared to play their constructive role in the society in general and in the workplace in particular. Online education provides an individual with much more flexibility than the traditional education. Students that take online courses are provided with the facility to work along with carrying on their studies. Many students with great potential are not able to continue their studies just because they are not able to afford the fee and other expenses associated with education. Online education brings students back to the world of academia by providing them with flexible schedules. The students can adjust their studies according to their work schedule rather than having to adjust their work schedule according to their studies. Thus, an individual having online education is more empowered as c ompared to the students of traditional education. The freedom online education offers enables the students to optimize on their time management skills. â€Å"[S]elf-paced, independent learners are usually more disciplined in terms of preparation and time management† (Sanders, 2011). On the other hand, schedules in the traditional

Health and Communities week 16150 Assignment Example | Topics and Well Written Essays - 250 words

Health and Communities week 16150 - Assignment Example HIV patients require exceptional health needs, which have negative influences to the global economies due to the necessity to manufacture drugs that improve lives of the ailing individuals (Shi & Stevens, 2010). Science, policy, and practice ought to be integrated and utilized in the alleviation of the HIV pandemic. Integration of these factors can direct to development of strategies that can be utilized to bring about positive influences towards the matter. Utilization of science concepts can practically enable development of drugs that can be utilized to thwart further spread of the disease (UNESCO, 2008). Additionally, policy can ensure that individuals with the illness avoid spread to the healthy individuals. Consequently, the overall spread can be substantially minimized through integration of these imperative concepts. Science can enable collection of imperative information concerning that can be practically applied to educator communities regarding the HIV pandemic. However, this can be realized via effectual policies and programs that concentrate on the global matter. Policy architects and implementers can utilize the information in the creation of education systems to disseminate i nformation to all regions across the globe (UNESCO, 2008). The epidemiological resources can enable healthiness officials and policy makers develop mechanisms to prevent further spread in different regions across the globe. The resources can allow policy makers to establish the predisposing factors thus enable them to tackle the matter

How hip hop has a positive influence in America Essay

How hip hop has a positive influence in America - Essay Example In this paper I will expound on the positive influences of hip hop music in America. The American society has remained silent on issues affecting them for a long time but hip-hop has been like a savior to those people. This music generally educated and shed light on issues that related or affected life for example violence through promoting a message of peace among the Americans. Hip- hop was used as a means of passing grievances and also by people who wanted to raise their views to the public. Some hip- hop songs tried to show the seriousness and effects of using drugs and it also spread communal messages across the country to inform people on what was happening in the ghetto life. In addition, hip-hop music has been a means of expression of the minority. Its main aim is to raise voices for the youths alienated  and show that they also have positive impacts in helping the community. Moreover, those people who are mistreated silently and they have no-one whom they can share their problems with are considered by the hip- hop music. In addition, graffiti which is also associated with this genre of music renders a means of unconventional means expression. Hip hop also encourages its listeners who are mostly youth to never give up in life and to push on and they will succeed in spite of the problems they are facing. Thus, hip-hop culture has had a positive influence of being the voice of those who are rendered helpless and voiceless by their status either due to hardships, race etc. Hip- hop has endorsed acute thinking on issues that the media find sensitive or fear to raise to the public. It has been used as tool for activism against vices in the society. In the United States of America Hip- hop has really tried in the elimination of racism. Hip- hop dancing moves have been used to eliminate violence. Due to gender inequality in America, hip-hop has been promoting issues affecting gender equality by making sure that

History of Business Ethics and Ethical Theory Essay

History of Business Ethics and Ethical Theory - Essay Example The current business environment is highly competitive, organisations are encouraged to practice fair trade and avoid foul play so as to have a competitive edge over its rivals. Corporate social responsibility is a major ethical consideration in a company since it shows that the entity is mindful of the peoples’ welfare. Other important ethical principles in an entity include truth, honesty and justice. These principles have to be in line with the business environment in which the firm operates in to ensure long term success. It is important to understand the company’s ethical value so as to manage it appropriately. Firstly, there should be an assessment of the efficiency of ethical value in the organisation. Secondly, the leadership and senior management have to show commitment towards the program (Maignan and Ferrel, 2004:34). Thirdly, there should be formalisation of the code of ethics through proper training and communication (Maignan and Ferrel, 2005:34). Fourthly, there should be codification of the ethics and proper communication within the entity (Maignan and Ferrell, 2005:45). Finally, the code of ethics should be integrated into the organisation’s culture. In order to achieve this, the leadership should be on the forefront in ensuring the company’s ethics are maintained. Various stakeholders have the power to influence the attainment of ethical values and norms in a given entity. They are encouraged to do vigilantly so as to keep the company’s ethics in check. There are various challenges affecting ethics in an entity including, defiance by some employees and failure to keep up with the stated code of ethics (Maignan and Ferrell, 2005:45). This results to the practice of... It is important to understand the company’s ethical value so as to manage it appropriately. Firstly, there should be an assessment of the efficiency of ethical value in the organization. Secondly, the leadership and senior management have to show commitment towards the program. Thirdly, there should be a formalization of the code of ethics through proper training and communication (Maignan and Ferrel, 2005:34). Fourthly, there should be a codification of the ethics and proper communication within the entity (Maignan and Ferrell, 2005:45). Finally, the code of ethics should be integrated into the organization’s culture. In order to achieve this, the leadership should be on the forefront in ensuring the company’s ethics are maintained.Various stakeholders have the power to influence the attainment of ethical values and norms in a given entity. They are encouraged to do vigilantly so as to keep the company’s ethics in check. There are various challenges affec ting ethics in an entity including, defiance by some employees and failure to keep up with the stated code of ethics. This results in the practice of unethical behavior in businesses including foul play among the employees, unfair trade practices, poor time management and poor customer service. These are some of the unethical issues common to businesses in the contemporary world. In a nutshell, ethics are important in the daily activities of a business since they determine the relationships within the entity and with interested parties.

The Overall Economic Challenge the US Is Facing Today Focusing on Both Research Paper

The Overall Economic Challenge the US Is Facing Today Focusing on Both Domestic and International Issues - Research Paper Example The US market played a key role in the economic recovery promotion thanks to its openness. However, the situation radically changed in 2001. With the sudden failure of the capital spending boom, the U.S. economy found itself in hard times. Fuelled by a number of serious economic challenges, the present recession seems to be long and quite drawn out. This paper examines some economic challenges faced by the U.S. today, both domestically and internationally. It is based on the review of a range of peer-reviewed articles in the field that focus on various aspects of the U.S. economic challenge. The paper identifies some common themes in the sources explored, as well as attempts to provide solutions to the questions raised. Inflation and Budget Deficit as Major Economic Challenges A well-known American economist Shapiro says that inflation is one of the signs of the economic system’s lack of capacity to handle its copious responsibilities. He defines inflation not as a purely econ omic problem, but above all the problem of social and political origin. Shapiro writes, â€Å"To understand the basic underlying causes of inflation, we must ask ourselves why our government has persisted, through Democratic and Republican administrations alike, in making the political choice of running large budgetary deficits and financing these, in part, by increasing the supply of money.† (Shapiro, 1981, p. 145). Therefore, combating inflation is inseparably linked to overcoming the budget deficit, which has grown enormous in the last decades. Shapiro explains that the current inflationary policies are not the result of incompetent governmental acts. They rather illustrate the response of the government to the pressure on the part of those constituents that demand increasing and additional benefits from the government, yet do not want to accept tax increases.  

Assistance according to Roper-Logan-Tierney Model of Nursing Assignment

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The Overall Economic Challenge the US Is Facing Today Focusing on Both Research Paper

The Overall Economic Challenge the US Is Facing Today Focusing on Both Domestic and International Issues - Research Paper Example The US market played a key role in the economic recovery promotion thanks to its openness. However, the situation radically changed in 2001. With the sudden failure of the capital spending boom, the U.S. economy found itself in hard times. Fuelled by a number of serious economic challenges, the present recession seems to be long and quite drawn out. This paper examines some economic challenges faced by the U.S. today, both domestically and internationally. It is based on the review of a range of peer-reviewed articles in the field that focus on various aspects of the U.S. economic challenge. The paper identifies some common themes in the sources explored, as well as attempts to provide solutions to the questions raised. Inflation and Budget Deficit as Major Economic Challenges A well-known American economist Shapiro says that inflation is one of the signs of the economic system’s lack of capacity to handle its copious responsibilities. He defines inflation not as a purely econ omic problem, but above all the problem of social and political origin. Shapiro writes, â€Å"To understand the basic underlying causes of inflation, we must ask ourselves why our government has persisted, through Democratic and Republican administrations alike, in making the political choice of running large budgetary deficits and financing these, in part, by increasing the supply of money.† (Shapiro, 1981, p. 145). Therefore, combating inflation is inseparably linked to overcoming the budget deficit, which has grown enormous in the last decades. Shapiro explains that the current inflationary policies are not the result of incompetent governmental acts. They rather illustrate the response of the government to the pressure on the part of those constituents that demand increasing and additional benefits from the government, yet do not want to accept tax increases.  

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Effects of Central Bank Independence on Inflation Rates

Effects of Central Bank Independence on Inflation Rates Abstract This paper analyses and explains the effects of central bank independence on a countrys inflation rates and its economic performance thereafter. It deals with the benefits believed to come along with independence and the delegation of monetary policy to the central bank, the determinants and accuracy of the index of central bank independence (CBI), and the different impact that CBI has on developed and developing countries. The studies and test conducted have shown that CBI lowers inflation in developed countries but in developing countries it might have the reverse effects, mainly due to the degree of independence, and factors like traditions, the law, and the statue of the economy which vary across countries. 1. Introduction This paper intends to study the relationship between central bank independence (CBI) and inflation levels among different countries; developing and industrialized. The main research problem that I intend to examine is whether central bank independence can lower the inflation rates of the countries that grant independence to their central banks, and whether this can lead to improved economic performance. What is discussed in this paper is not only whether central bank independence (CBI) can lower inflation and hence inflation variability, but also whether this can be achieved at low cost. The economies presented in the study include both those of the developed countries, e.g. the U.K., as well as those in transition e.g. Russia that have recently gained entrance in the EU. In this paper I analyze the impact of CBI on inflation, the benefits that are believed to come along with CBI and the factors used in measuring CBI. You will see that CBI can have different forms of measurement that produce slightly different results, hence the effectiveness of the CBI index is also analyzed. The reason for choosing this topic for further study is simply because during the past two decades there has been a considerable move towards central bank independence across several countries, with the belief that this will improve their inflation levels and thus contribute to economic growth. However, as you will see further on, this is not always the case, as some studies have revealed contradicting results, and economists and academics continue their studies to get a clerer picture of this issue. 2. The Spread of CBI and The Reasons for It To begin with, it is amazing how fast CBI has spread among countries and governments since the late 1980s. One simple explanation of this spread is A.Alesinas (1988; 845) statement: independent central banks have been associated with a lower average inflation rate and may have been responsible for reducing politically induced volatility of monetary policy and inflation 2.1 Should a central bank become independent? Folder (2005) explains that CBI was adopted to avoid possible disputes between political parties as a central bank is seen as a provider of information. Many economists have expressed their opinion on the spread of CBI; others have linked it to a way of avoiding the blame of political failure by some governmental parties (Miller, G. 1998, White 1994). Others have linked it to the infrequent changes of the government (de Haan and vant Hag, 1995). That is, central bank independence in many cases was adopted after periods of high inflation in order to reduce it, due to the inflation targeting function a central bank is capable of pursuing. It can also be associated with the attraction of foreign investment and hence economic growth as a consequence of the targets set and the autonomy with which the bank can then operate (Maxfield, 1997). In countries within the European Union, CBI is a perquisite following the Maastricht Treaty (1992) for adopting the euro currency. Overall and according to Folder (2005), independence has always been related to the adoption of anti-inflationary measures for pursuing monetary policy, but its explanation lies within the sociology of the financial elites and the politics legitimizing their policy preferences. The reasons behind achieving price stability through gaining central bank independence, Cukierman (1996) explains are several and include; the breakdown of other institutions like the European Monetary System (EMS) that had been responsible for maintaining price stability which is considered as the single and most significant objective of a central bank. Ilieva and Gregoriou (2005) suggest that in transition economies central bank independence has increased mainly due to the desire of such countries like e.g. Czech Republic, Poland, Romania, etc., to join the European Union and the acquis communautaire that applicant countries should adopt. As they continue to reason the addiction to CBI, they add that another incentive for CBI is the international financial institutions such as the IMF (International Monetary Fund) that require certain criteria to be met before making unconditional loans, and these criteria are feasibly met with the help of CBI. Also, countries are attracted to CBI as this will attract potential investors by improving the nations creditworthiness. Cukierman, A. (1996) analyses developments since the late 1980s to the legal independence of central banks and to its meaning; the measurement of CBI, the interaction of central banks with the government, its effect on the economy, its determinants, etc According to Cukierman, the trend towards CBI is due to a quest for price stability which is due to the following two reasons: First, following the stagflation of the seventies and the adverse economic performance of some high inflation countries, in Latin America and elsewhere, conventional wisdom concerning inflation and real growth has changed. Whereas during the sixties the accepted view was in line with Keynesian dogma, that some inflation is good for growth, during the eighties and nineties became that inflation and the associate uncertainties retard growth. (1996; 3) The good economic performance of Japan and Germany, countries with already low inflation added more value to the above concept. Second, the rapid growth and internationalization of capital markets raised the importance of price stability as governments and private investors sought to enhance their access to broadening world financial markets. (1996; 3) 2.2 Types of Central Bank Independence Independence with regards to central banking can be categorized into different groups, depending on the degree of freedom and the subject from which the central bank becomes independent. The major types of independence are; Legal independence, where the bank is partly accountable to the government and legislation provides a framework within which the central bank and the government cooperate on certain issues. This form of independence varies significantly among countries as it depends on how strong in the law in each country and the degree to which it is followed. However, the degree of legal independence, namely LVAW, as it will be shown below, has been used by many as a major index of measuring the degree of CBI. Goal independence refers to the case where the central bank is allowed to set its own goals, e.g. price stability, money supply, inflation targeting. However in most cases under this type of independence, the bank will decide on its goals with the confirmation of the relevant governmental departments. In this way, goal independence helps avoiding conflicts among fiscal and monetary policies, and increases the level of transparency and credibility of the central bank over its goals. Operational independence is the most common form of independence and is followed by many central banks around the world, for instance, the Bank of England since 1997. It involves the government setting the banks goals e.g. a 2% level of inflation, but the central bank being free to choose the instruments e.g. interest rates, to meet the targets set by the government. Another form of independence is managerial independence, by which the central bank has the power of appointing its own stuff, set its budget, etc. This form is a necessity for the existence of the other abovementioned forms of central bank independence and is therefore granted to all central banks that can call themselves independent. 2.3 The case for central bank independence There is a huge surge towards central bank independence by both the public and the governments, in the belief that independent central banks will not only achieve low inflation rates and price stability, but will subsequently lead to long-term economic growth and development. However CBI is an issue that needs further research before determining whether it should be adopted by all countries. This depends on the economic state of the country, whether it is a developed or a developing country or even on the demand of autonomy by the political parties within the country since by granting independence the government must pass to the bank the responsibilities of e.g. controlling the interest rates, etc. over which it used to have the power. Another issue that needs to be examined before granting independence to a central bank is the political stability and the degree of uncertainty within the country. This is because in times of uncertainty and instabilities, e.g. prior to elections, the public favours CBI as an independent central bank is more objective in its role and always forward looking without ignoring the long-term effects of its decisions. The majority of the parties affected by the actions of an independent central bank, i.e. the government as well as the general public are attracted by CBI because of the greater accountability and transparency the bank is equipped with when adopting a greater degree of autonomy. Moreover, it is expected to bring lower levels of inflation and this is the main reason why people welcome CBI and the number of central banks becoming independent has been increasing over the years. The main reason behind this expectation is because a central bank generally acts in favor of the public and in addition to the fact that it becomes free from the government and any political pressures, it is in a position to avoid short-term temptations regarding low interest rates which the government usually uses prior to electoral periods, for the sake of long-term low inflation and price stability, which in combination with other exogenous factors can result in economic growth. Moreover, when a central bank gains its independence through institutional reform it becomes capable of appointing its own governor thus it moves away from political interference, and can also set an explicit inflation target. Additionally and as Carlstrom, T.C. and Fuerst, S.T. (2006) explain independence helps a central bank in constraining the behavior of fiscal authorities. That is, it can prevent people and especially the government following fiscal policy from acting in their short-term best interests, recognizing that any actions taken in the short-term e.g. lowering the interest rates to attract investments, may become undesirable in the long-term, e.g. rising inflation levels as with higher demand from low interest rates, the prices will likely increase. In this way, CBI also prevents the fiscal authorities from inflating the short-term for delivering e.g. favorable exchange rates. Hence, monetary policy can run in a more credible way and following the targets set, markets w ill know what to expect thus shocks will be limited. However an independent central bank is also likely in extreme cases to bring so low levels of inflation that can be harmful to the economy. According to Epstein, G. (2007), the 3.5% drop in inflation levels by countries adopting an inflation-targeting monetary policy (IMF, 2006) is questionable as to whether this decline will improve economic growth. Explicitly, if the inflation level of a country is already low and the central bank adopts an inflation-targeting monetary policy then the resulting lower inflation level might prove dangerous to the economy by generating economic cycles. Cukierman (1996) has developed two separate approaches for reasoning the urge towards central bank independence and explaining the benefits that can be enjoyed from independence. These include; the theoretical approach according to which in the short-run monetary policy can be conducted in such a way that it allows for some inflation so that it can achieve employment, high economic activity and low interest rates. Hence, policy makers can expect some degree of inflation which they will present in the form of nominal wage and capital market contracts. In this way however, policy makers will have to keep inflation at a level that would balance the real equilibrium if they had been committed to zero-inflation. As a result of this discretionary use of monetary policy, this is subject to inflationary bias, and this bias can only be minimised if monetary policy is delegated to an independent central bank because only this institution is free to choose how to operate monetary policy and takes interest mostly if not only to price stability. And the empirical approach by which the case of CBI lies on empirical evidence showing that countries with an independent central bank have lower inflation rates and higher growth rates per capita output. An example of such a country is New Zealand: 2.3.1 The case of New Zealand New Zealand is a country whose central bank managed to drop the inflation level after being granted with greater independence. The Reserve Bank of New Zealand was granted independence in 1989 following the Reserve Bank of New Zealand Act of 1989 and had therefore established an explicit inflation target. The result was to reduce inflation levels from 7.6% during the years 1955-1988 from when the reserve bank was not independent, down to just 2.7%, after becoming independent, during the period 1989-2000. The latter rate is now considered one of the lowest among industrialized countries. It is obvious that among all OPEC countries, the central bank of New Zealand managed to achieve the lowest inflation rate, especially during the 1990s. What happened during the period of the inflation reduction was that the reserve bank of New Zealand went through a reform that resulted in it being granted with independence and a greater degree of autonomy, leading to low inflation. Specifically, prior to 1989 it used to be an arm of the government. Monetary policy used to be subject to the ministry of finance and therefore the government. As a result, the level of independence was one of the lowest among industrialized countries, while the level of inflation was of the highest. Even then, the relationship between central bank independence was negative, even though the results were the reverse of what is considered optimum, i.e. greater independence, lower inflation. In 1989, the Reserve Bank of New Zealand Act was passed by law. This act codifies inflation targeting and gives more autonomy to the countrys central bank in order to meet its objectives. According to the Act the central banks primary function is: to formulate and implement monetary policy directed to the economic objective of achieving and maintaining stability in the general level of prices. (Reserve Bank of New Zealand Act, 1989 as quoted in Carlstrom T.C. and Fuerst, S.T., 2006, p.3). The impact of the Act on New Zealands economy and specifically the Reserve Banks autonomy can be seen in figure 2 below, which compares the degree of independence across different time periods and among different countries. The findings of the New Zealand case show that if the country had adopted independence earlier then its average inflation rate would be 3.4% rather than 7.6% that it actually used to be, assuming all other things being equal. Following this assumption, CBI itself would be sufficient to reduce worldwide inflation levels from 5.6% down to 3.8%. Despite the considerable drop in New Zealands inflation rate it is still questionable whether this drop was caused solely by CBI, and it is difficult, if not impossible, to quantify by how much the inflation reduction was due to CBI. Firm conclusions cannot be made yet since the data used in this case is of limited sample size and comparisons would therefore be insufficient. What is true is that the relationship between CBI and inflation is similar across time. Any changes to the strength of this relationship are mostly due to macroeconomic and other factors such as the state of the economy, the state of the government, e.g. democracy, etc. and others that will be explained later in this paper. 3. Measuring Central Bank Independence The degree of CBI for each central bank varies according to the state of each country and to compliance with the law. As Cukierman explains, in developing countries where compliance with the law is poor, a suitable proxy for CBI would be the turnover of central bank governors, whereas in industrialised countries such a proxy would be legal independence. Generally, when the appropriate index of independence is used, the results indicate an inverse relationship between CBI and inflation. However, care should be taken not to mistake legal independence with actual independence, as legal independence is necessary but does not guarantee actual independence; legal independence is a necessary, but not a sufficient condition for a truly independent CB. (Cukierman, A., 2001; 7). Exceptions exist, like developed countries, where legal independence seems to be a good proxy because law is highly complied. For a clearer picture of the effectiveness of CBI on the economy, it is preferred that some variables that make up the CBI index are used in combination, or that some indices are used only for a specific purpose. For instance, legal independence is a good proxy for actual independence in developed countries rather than in developing ones. 3.1 The Cukierman Index of CBI The method that will be used the most in this paper to measure the degree of central bank independence and its relationship with inflation will be Cukierman Index (1992), the most widely accepted and used index for this purpose. Initially, the exact definition of the Cukierman Index according to Siklos, P. (1992; 65) is: An indicator of the degree of autonomy enjoyed by several central banks. Cukierman Index to demonstrate graphically the measures of CBI and inflation during two different decades, namely the 1980s and the 1990s: As can be seen in the above graphs during the 1980s even though CBI was not common across countries, there was a negative relationship between CBI and inflation level. This means that the greater the level of independence of a central bank, the lower the level of inflation within the particular country. It is thus obvious that the correlation between CBI and inflation is negative, whereas the errors overall are not fitted closely on the regression line. We should note however that the decade of 1980s was before central banks especially those within industrialized countries underwent major reforms in their statutes which then allowed them a greater degree of autonomy. During the 1990s as Siklos, P. (2002) explains, most central banks went through a reform, as there was a trend towards CBI. As a result the overall degree of CBI increased and all index values were revised upwards, the government granting more autonomy to central banks, in the belief that greater independence would just be adequate for lowering the level of inflation. However, the relationship between CBI and inflation during the 1990s turned out to be the reverse of that of the previous decade. That is, the correlation between CBI-inflation now became weaker but positive since the regression line on the scatter gram in figure 3b has an upward slope, meaning that inflation increases with the degree of independence. It is hard to explain what was wrong with the findings of the 1990s that caused the correlation to be positive, however one might argue that CBI increased for all countries during the 1990s and so it also reflects the inflation performance of the previous decade, although the more independent central banks have delivered lower inflation levels in the 1980s. Furthermore, the Cukierman Index used is believed to contain some inaccuracies concerning the measurements of the degree on independence and thereafter the relationship of that with inflation because it was extended from the 1980s towards the 1990s in a different way than the one initially specified. For this reason more tests will be carried out to explain and compare the effectiveness of measuring CBI using the Cukierman Index in contrast to other indices developed for the same purpose, for instance Alesina and Summers Index. The Cukierman Index will also be used to test the effect of CBI on inflation in transition economies, based on Ilieva and Gregoriou (2005) paper regarding inflation performance, i.e. average inflation and inflation variance, and CBI in transition economies during the period 1991-2003. 3.2 The determinants of the CBI index The degree of independence varies across countries. This is not only due to factors such as the type of independence of each bank, although the most common is operational independence, the degree of law compliance in each country, and tradition, but some other systematic factors as well. Such factors are described and categorized by Cukierman, who presents some hypotheses on these factors: Hypotheses about the determinants of CBI Initially, it is widely accepted that any form of inflationary bias raises the independence of central banks to the degree that politicians wish to grant to the CB. The main idea behind this concept is that the benefits of delegating monetary policy to an independent central bank will be higher when inflation bias is higher in instances of e.g. employment reaction to inflation shocks. This delegation according to Cukierman helps in preventing the competing political party from taking on activities not favoured by the government. Secondly, Cukierman et al (1992, 2001) make the hypothesis that: the wider are the financial markets and the more elastic the supply of funds to government with respect to the interest rate, the more likely is the CB to be independent. (2001; 19). Additionally, Maxfield (1995) supports that political authorities favour CBI where there is need for funds. When this need is high as he explains, the government delegates more authority to the central bank in order to signal the nations creditworthiness. Finally, the cases of countries that have experienced extremely high levels of inflation in the past, like Germany, Austria, and Brazil, show that such countries are more likely to delegate independence to a central bank so that politicians do not interfere with monetary policy. 3.3 The measurement of the CBI Index Due to the widespread concept that the degree of independence of a nations central bank plays a crucial role upon the policy actions and inflation, Cukierman (1992) presents an analysis of the effects of CBI on inflation and provides various indicators of CBI. However, as he explains, the degree of CBI is determined by several factors from legal to cultural some of which are difficult to measure and quantify, therefore the impact of CBI on inflation varies among countries and there is a certain degree of uncertainty about the level of CBI. As a result, the measurement and the creation of an index of CBI have been based on legal independence, as the degree of CBI also depends on the degree of independence granted to the bank by the law. Despite the variations in the degree of CBI, it can be deduced that a low degree of CBI is linked with higher levels of inflation and inflation variability, while the level of credibility of a central bank with a low degree of CBI will be lower. Cukierman presents three different sets of indicators of CBI; a proxy for legal independence and proxies for the deviations of actual from legal independence. Independence measured under these proxies is limited specifically to the Central banks ability to meet a single objective; price stability. The reason for using several proxies in measuring CBI is because each proxy is a noisy indicator that captures a somewhat different aspect of CB independence (Cukierman, 1992; 370), so using a combination of them reduces this noisiness of the overall measure 3.3.1 Measuring and Coding Legal Central Bank Independence Using a proxy of legal independence is vital in making comparisons with previous studies on the impact of CBI on economic issues because all existing attempts on the features of an independent central bank rely on the banks legal independence. Cukierman presents the indices of legal aspects of CBI by separating into four groups the variables which make for a legally independent central bank. These groups are: Chief executive officer: CEO Policy formulation: PF Final Objectives: OBJ Limitations on lending: LLand codes them by the degree of independence of each group for the central bank of each of the countries included in the study. The main assumptions made are; the central banks whose single objective is price stability are considered to be more independent, so are central banks with stricter limitations on lending from the CB. The coding involves sixteen different variables in a scale from 0 (least independence) to 1 (maximum independence), during the time period 1950-1989, separated into four different decades. Due to the narrow definition of each of the variables used and the consequent lack of precision and multicollinearity problems that may arise, these variables are aggregated into eight legal variables by just calculating the unweighted mean of the codings used. Furthermore, it is necessary to have an additional single index of legal independence for each country to assess the aggregate legal independence of the CB. This index can have two alternatives, the LVAU and the LVAW, that are computed by calculating the average of the codings of the first eight variables as described above. Table 1 in Appendix A shows the ranking of the countries according to the legal independence of their central banks as measured by the LVAU during the eighties decade. The LVAW would also give a similar picture. Looking at the table of results one can see that among the seven most highly-ranked countries four are developed (Switzerland, West Germany, Austria and U.S.), while among the seven least-ranked countries four are less developed (Morocco, Panama, Yugoslavia and Poland). Generally, the top 10% of the rankings is comprised of developed countries, whereas the bottom 10% is concentrated with less developed countries. One should also note that there had been no hyperinflation experienced by developed countries during the 1980s, while some of the Latin America countries have, e.g. Brazil and Bolivia with a rate of 230%. This according to Cukierman may suggest that legal CBI may be neither necessary nor sufficient for low inflation. (1992; 382). 3.3.2 The turnover rate of Central Bank governors as a proxy for actual independence As already explained, the legal status of the central bank is just one of the several determinants of actual CBI. There is no clear systematic indicator of actual CBI, but Cukierman (1992) presents two sets of such indicators. One is based on the actual turnover rate of the central banks governor, and the other is based on the answers given to a questionnaire on CBI. Table 2 in Appendix B shows the CB governors turnover rates for the period 1980-1989. It is assumed that the lower the turnover rate the higher the degree of actual independence. Although the results are chronologically old, it is obvious that turnover rates in less developed countries occupy a range that has never been experienced by developed countries. It is indicative that more than half of the less developed countries have a turnover rate higher than the maximum of the rate of developed countries. It is clear that less developed countries experience higher inflation rates, on the grounds of lower actual CBI. On the other hand, low turnover does not necessarily imply a high level of CB independence on the grounds that a relatively subservient governor will tend to stay in office longer than a governor who stands up to the executive branch. (Cukierman, 1992; 385) Critically assessing the results, since the maximum turnover rate for developed countries is 0.2 (.e. five years) suggests that the turnover proxy may not be effective proxies for actual CBI for the sample of developed countries, whereas this proxy can be considered indicative for the sample of developing countries since these have turnover rates exceeding 0.2. 3.3.3 Central Bank Independence from answers to a questionnaire Another aspect of characterizing CBI is the questionnaire. Under this method, answers were obtained from qualified central bankers from twenty-four countries during the period 1980-1989. The main questions asked covered the issues of; legal independence, final monetary policy objectives, monetary policy instruments, actual independence and its divergence from the law and intermediate targets and their indicators. In coding the variables of the questionnaire, the bank is assumed to be more independent, all other things being equal, if the following hold; the term of office of the CB governor is longer than that of the government, limitations exist on lending from the CB which the government is in no position of altering, and in cases where stock targets exist because these mean that the CB is more free to meet its price stability target. Table 3 in Appendix C shows the ranking of central banks by aggregate indices of independence according to questionnaire responses. The aggregate indices of QVAU and QVAW reflect the law and the way it is implemented in practice respectively, as well as important information about actual independence, and are very similar (à ?=0.99). The rankings agree to earlier studies that central banks of developed countries are more independent. However, the median of QVAU for developed countries, that is 0.6 for Britain and Lebanon, is greater than the median for less developed countries, that is 0.49 for Uruguay, and this contradicts the above findings for legal independence using the LVAU. When measuring the degree of CBI it should be taken into account that the measures used above fail to quantify all the aspects of CBI as some are difficult to quantify. Such aspects are the quality of the banks research department and its standing in comparison to other economic research institutions within the public sector (Cukierman, 1992). Independence is generally higher in countries with highly-developed financial markets according to Cukierman because the supervision of financial institutions is under the authority of the CB, so the larger the market the more wide the span of the CBs authority. 4. Central Bank Independence and Inflation Targeting In this section the impact of central bank independence on inflation, inflation variability and the economy overall is analyzed using a model to test whether CBI can actually lower inflation, and comparing the effects of CBI by using both the Cukierman and the Alesina indices of CBI. Additionally, the costs of achieving lower inflation through central bank independence are also explained. MacCallum, B. (1995) believes that it is strong will that is necessary for proper policy behaviour by central banks, not rules and regulations. A policy maker, i.e. a central banker in this case should act immediately to an inflation shock to restore the problem without letting any sp Effects of Central Bank Independence on Inflation Rates Effects of Central Bank Independence on Inflation Rates Abstract This paper analyses and explains the effects of central bank independence on a countrys inflation rates and its economic performance thereafter. It deals with the benefits believed to come along with independence and the delegation of monetary policy to the central bank, the determinants and accuracy of the index of central bank independence (CBI), and the different impact that CBI has on developed and developing countries. The studies and test conducted have shown that CBI lowers inflation in developed countries but in developing countries it might have the reverse effects, mainly due to the degree of independence, and factors like traditions, the law, and the statue of the economy which vary across countries. 1. Introduction This paper intends to study the relationship between central bank independence (CBI) and inflation levels among different countries; developing and industrialized. The main research problem that I intend to examine is whether central bank independence can lower the inflation rates of the countries that grant independence to their central banks, and whether this can lead to improved economic performance. What is discussed in this paper is not only whether central bank independence (CBI) can lower inflation and hence inflation variability, but also whether this can be achieved at low cost. The economies presented in the study include both those of the developed countries, e.g. the U.K., as well as those in transition e.g. Russia that have recently gained entrance in the EU. In this paper I analyze the impact of CBI on inflation, the benefits that are believed to come along with CBI and the factors used in measuring CBI. You will see that CBI can have different forms of measurement that produce slightly different results, hence the effectiveness of the CBI index is also analyzed. The reason for choosing this topic for further study is simply because during the past two decades there has been a considerable move towards central bank independence across several countries, with the belief that this will improve their inflation levels and thus contribute to economic growth. However, as you will see further on, this is not always the case, as some studies have revealed contradicting results, and economists and academics continue their studies to get a clerer picture of this issue. 2. The Spread of CBI and The Reasons for It To begin with, it is amazing how fast CBI has spread among countries and governments since the late 1980s. One simple explanation of this spread is A.Alesinas (1988; 845) statement: independent central banks have been associated with a lower average inflation rate and may have been responsible for reducing politically induced volatility of monetary policy and inflation 2.1 Should a central bank become independent? Folder (2005) explains that CBI was adopted to avoid possible disputes between political parties as a central bank is seen as a provider of information. Many economists have expressed their opinion on the spread of CBI; others have linked it to a way of avoiding the blame of political failure by some governmental parties (Miller, G. 1998, White 1994). Others have linked it to the infrequent changes of the government (de Haan and vant Hag, 1995). That is, central bank independence in many cases was adopted after periods of high inflation in order to reduce it, due to the inflation targeting function a central bank is capable of pursuing. It can also be associated with the attraction of foreign investment and hence economic growth as a consequence of the targets set and the autonomy with which the bank can then operate (Maxfield, 1997). In countries within the European Union, CBI is a perquisite following the Maastricht Treaty (1992) for adopting the euro currency. Overall and according to Folder (2005), independence has always been related to the adoption of anti-inflationary measures for pursuing monetary policy, but its explanation lies within the sociology of the financial elites and the politics legitimizing their policy preferences. The reasons behind achieving price stability through gaining central bank independence, Cukierman (1996) explains are several and include; the breakdown of other institutions like the European Monetary System (EMS) that had been responsible for maintaining price stability which is considered as the single and most significant objective of a central bank. Ilieva and Gregoriou (2005) suggest that in transition economies central bank independence has increased mainly due to the desire of such countries like e.g. Czech Republic, Poland, Romania, etc., to join the European Union and the acquis communautaire that applicant countries should adopt. As they continue to reason the addiction to CBI, they add that another incentive for CBI is the international financial institutions such as the IMF (International Monetary Fund) that require certain criteria to be met before making unconditional loans, and these criteria are feasibly met with the help of CBI. Also, countries are attracted to CBI as this will attract potential investors by improving the nations creditworthiness. Cukierman, A. (1996) analyses developments since the late 1980s to the legal independence of central banks and to its meaning; the measurement of CBI, the interaction of central banks with the government, its effect on the economy, its determinants, etc According to Cukierman, the trend towards CBI is due to a quest for price stability which is due to the following two reasons: First, following the stagflation of the seventies and the adverse economic performance of some high inflation countries, in Latin America and elsewhere, conventional wisdom concerning inflation and real growth has changed. Whereas during the sixties the accepted view was in line with Keynesian dogma, that some inflation is good for growth, during the eighties and nineties became that inflation and the associate uncertainties retard growth. (1996; 3) The good economic performance of Japan and Germany, countries with already low inflation added more value to the above concept. Second, the rapid growth and internationalization of capital markets raised the importance of price stability as governments and private investors sought to enhance their access to broadening world financial markets. (1996; 3) 2.2 Types of Central Bank Independence Independence with regards to central banking can be categorized into different groups, depending on the degree of freedom and the subject from which the central bank becomes independent. The major types of independence are; Legal independence, where the bank is partly accountable to the government and legislation provides a framework within which the central bank and the government cooperate on certain issues. This form of independence varies significantly among countries as it depends on how strong in the law in each country and the degree to which it is followed. However, the degree of legal independence, namely LVAW, as it will be shown below, has been used by many as a major index of measuring the degree of CBI. Goal independence refers to the case where the central bank is allowed to set its own goals, e.g. price stability, money supply, inflation targeting. However in most cases under this type of independence, the bank will decide on its goals with the confirmation of the relevant governmental departments. In this way, goal independence helps avoiding conflicts among fiscal and monetary policies, and increases the level of transparency and credibility of the central bank over its goals. Operational independence is the most common form of independence and is followed by many central banks around the world, for instance, the Bank of England since 1997. It involves the government setting the banks goals e.g. a 2% level of inflation, but the central bank being free to choose the instruments e.g. interest rates, to meet the targets set by the government. Another form of independence is managerial independence, by which the central bank has the power of appointing its own stuff, set its budget, etc. This form is a necessity for the existence of the other abovementioned forms of central bank independence and is therefore granted to all central banks that can call themselves independent. 2.3 The case for central bank independence There is a huge surge towards central bank independence by both the public and the governments, in the belief that independent central banks will not only achieve low inflation rates and price stability, but will subsequently lead to long-term economic growth and development. However CBI is an issue that needs further research before determining whether it should be adopted by all countries. This depends on the economic state of the country, whether it is a developed or a developing country or even on the demand of autonomy by the political parties within the country since by granting independence the government must pass to the bank the responsibilities of e.g. controlling the interest rates, etc. over which it used to have the power. Another issue that needs to be examined before granting independence to a central bank is the political stability and the degree of uncertainty within the country. This is because in times of uncertainty and instabilities, e.g. prior to elections, the public favours CBI as an independent central bank is more objective in its role and always forward looking without ignoring the long-term effects of its decisions. The majority of the parties affected by the actions of an independent central bank, i.e. the government as well as the general public are attracted by CBI because of the greater accountability and transparency the bank is equipped with when adopting a greater degree of autonomy. Moreover, it is expected to bring lower levels of inflation and this is the main reason why people welcome CBI and the number of central banks becoming independent has been increasing over the years. The main reason behind this expectation is because a central bank generally acts in favor of the public and in addition to the fact that it becomes free from the government and any political pressures, it is in a position to avoid short-term temptations regarding low interest rates which the government usually uses prior to electoral periods, for the sake of long-term low inflation and price stability, which in combination with other exogenous factors can result in economic growth. Moreover, when a central bank gains its independence through institutional reform it becomes capable of appointing its own governor thus it moves away from political interference, and can also set an explicit inflation target. Additionally and as Carlstrom, T.C. and Fuerst, S.T. (2006) explain independence helps a central bank in constraining the behavior of fiscal authorities. That is, it can prevent people and especially the government following fiscal policy from acting in their short-term best interests, recognizing that any actions taken in the short-term e.g. lowering the interest rates to attract investments, may become undesirable in the long-term, e.g. rising inflation levels as with higher demand from low interest rates, the prices will likely increase. In this way, CBI also prevents the fiscal authorities from inflating the short-term for delivering e.g. favorable exchange rates. Hence, monetary policy can run in a more credible way and following the targets set, markets w ill know what to expect thus shocks will be limited. However an independent central bank is also likely in extreme cases to bring so low levels of inflation that can be harmful to the economy. According to Epstein, G. (2007), the 3.5% drop in inflation levels by countries adopting an inflation-targeting monetary policy (IMF, 2006) is questionable as to whether this decline will improve economic growth. Explicitly, if the inflation level of a country is already low and the central bank adopts an inflation-targeting monetary policy then the resulting lower inflation level might prove dangerous to the economy by generating economic cycles. Cukierman (1996) has developed two separate approaches for reasoning the urge towards central bank independence and explaining the benefits that can be enjoyed from independence. These include; the theoretical approach according to which in the short-run monetary policy can be conducted in such a way that it allows for some inflation so that it can achieve employment, high economic activity and low interest rates. Hence, policy makers can expect some degree of inflation which they will present in the form of nominal wage and capital market contracts. In this way however, policy makers will have to keep inflation at a level that would balance the real equilibrium if they had been committed to zero-inflation. As a result of this discretionary use of monetary policy, this is subject to inflationary bias, and this bias can only be minimised if monetary policy is delegated to an independent central bank because only this institution is free to choose how to operate monetary policy and takes interest mostly if not only to price stability. And the empirical approach by which the case of CBI lies on empirical evidence showing that countries with an independent central bank have lower inflation rates and higher growth rates per capita output. An example of such a country is New Zealand: 2.3.1 The case of New Zealand New Zealand is a country whose central bank managed to drop the inflation level after being granted with greater independence. The Reserve Bank of New Zealand was granted independence in 1989 following the Reserve Bank of New Zealand Act of 1989 and had therefore established an explicit inflation target. The result was to reduce inflation levels from 7.6% during the years 1955-1988 from when the reserve bank was not independent, down to just 2.7%, after becoming independent, during the period 1989-2000. The latter rate is now considered one of the lowest among industrialized countries. It is obvious that among all OPEC countries, the central bank of New Zealand managed to achieve the lowest inflation rate, especially during the 1990s. What happened during the period of the inflation reduction was that the reserve bank of New Zealand went through a reform that resulted in it being granted with independence and a greater degree of autonomy, leading to low inflation. Specifically, prior to 1989 it used to be an arm of the government. Monetary policy used to be subject to the ministry of finance and therefore the government. As a result, the level of independence was one of the lowest among industrialized countries, while the level of inflation was of the highest. Even then, the relationship between central bank independence was negative, even though the results were the reverse of what is considered optimum, i.e. greater independence, lower inflation. In 1989, the Reserve Bank of New Zealand Act was passed by law. This act codifies inflation targeting and gives more autonomy to the countrys central bank in order to meet its objectives. According to the Act the central banks primary function is: to formulate and implement monetary policy directed to the economic objective of achieving and maintaining stability in the general level of prices. (Reserve Bank of New Zealand Act, 1989 as quoted in Carlstrom T.C. and Fuerst, S.T., 2006, p.3). The impact of the Act on New Zealands economy and specifically the Reserve Banks autonomy can be seen in figure 2 below, which compares the degree of independence across different time periods and among different countries. The findings of the New Zealand case show that if the country had adopted independence earlier then its average inflation rate would be 3.4% rather than 7.6% that it actually used to be, assuming all other things being equal. Following this assumption, CBI itself would be sufficient to reduce worldwide inflation levels from 5.6% down to 3.8%. Despite the considerable drop in New Zealands inflation rate it is still questionable whether this drop was caused solely by CBI, and it is difficult, if not impossible, to quantify by how much the inflation reduction was due to CBI. Firm conclusions cannot be made yet since the data used in this case is of limited sample size and comparisons would therefore be insufficient. What is true is that the relationship between CBI and inflation is similar across time. Any changes to the strength of this relationship are mostly due to macroeconomic and other factors such as the state of the economy, the state of the government, e.g. democracy, etc. and others that will be explained later in this paper. 3. Measuring Central Bank Independence The degree of CBI for each central bank varies according to the state of each country and to compliance with the law. As Cukierman explains, in developing countries where compliance with the law is poor, a suitable proxy for CBI would be the turnover of central bank governors, whereas in industrialised countries such a proxy would be legal independence. Generally, when the appropriate index of independence is used, the results indicate an inverse relationship between CBI and inflation. However, care should be taken not to mistake legal independence with actual independence, as legal independence is necessary but does not guarantee actual independence; legal independence is a necessary, but not a sufficient condition for a truly independent CB. (Cukierman, A., 2001; 7). Exceptions exist, like developed countries, where legal independence seems to be a good proxy because law is highly complied. For a clearer picture of the effectiveness of CBI on the economy, it is preferred that some variables that make up the CBI index are used in combination, or that some indices are used only for a specific purpose. For instance, legal independence is a good proxy for actual independence in developed countries rather than in developing ones. 3.1 The Cukierman Index of CBI The method that will be used the most in this paper to measure the degree of central bank independence and its relationship with inflation will be Cukierman Index (1992), the most widely accepted and used index for this purpose. Initially, the exact definition of the Cukierman Index according to Siklos, P. (1992; 65) is: An indicator of the degree of autonomy enjoyed by several central banks. Cukierman Index to demonstrate graphically the measures of CBI and inflation during two different decades, namely the 1980s and the 1990s: As can be seen in the above graphs during the 1980s even though CBI was not common across countries, there was a negative relationship between CBI and inflation level. This means that the greater the level of independence of a central bank, the lower the level of inflation within the particular country. It is thus obvious that the correlation between CBI and inflation is negative, whereas the errors overall are not fitted closely on the regression line. We should note however that the decade of 1980s was before central banks especially those within industrialized countries underwent major reforms in their statutes which then allowed them a greater degree of autonomy. During the 1990s as Siklos, P. (2002) explains, most central banks went through a reform, as there was a trend towards CBI. As a result the overall degree of CBI increased and all index values were revised upwards, the government granting more autonomy to central banks, in the belief that greater independence would just be adequate for lowering the level of inflation. However, the relationship between CBI and inflation during the 1990s turned out to be the reverse of that of the previous decade. That is, the correlation between CBI-inflation now became weaker but positive since the regression line on the scatter gram in figure 3b has an upward slope, meaning that inflation increases with the degree of independence. It is hard to explain what was wrong with the findings of the 1990s that caused the correlation to be positive, however one might argue that CBI increased for all countries during the 1990s and so it also reflects the inflation performance of the previous decade, although the more independent central banks have delivered lower inflation levels in the 1980s. Furthermore, the Cukierman Index used is believed to contain some inaccuracies concerning the measurements of the degree on independence and thereafter the relationship of that with inflation because it was extended from the 1980s towards the 1990s in a different way than the one initially specified. For this reason more tests will be carried out to explain and compare the effectiveness of measuring CBI using the Cukierman Index in contrast to other indices developed for the same purpose, for instance Alesina and Summers Index. The Cukierman Index will also be used to test the effect of CBI on inflation in transition economies, based on Ilieva and Gregoriou (2005) paper regarding inflation performance, i.e. average inflation and inflation variance, and CBI in transition economies during the period 1991-2003. 3.2 The determinants of the CBI index The degree of independence varies across countries. This is not only due to factors such as the type of independence of each bank, although the most common is operational independence, the degree of law compliance in each country, and tradition, but some other systematic factors as well. Such factors are described and categorized by Cukierman, who presents some hypotheses on these factors: Hypotheses about the determinants of CBI Initially, it is widely accepted that any form of inflationary bias raises the independence of central banks to the degree that politicians wish to grant to the CB. The main idea behind this concept is that the benefits of delegating monetary policy to an independent central bank will be higher when inflation bias is higher in instances of e.g. employment reaction to inflation shocks. This delegation according to Cukierman helps in preventing the competing political party from taking on activities not favoured by the government. Secondly, Cukierman et al (1992, 2001) make the hypothesis that: the wider are the financial markets and the more elastic the supply of funds to government with respect to the interest rate, the more likely is the CB to be independent. (2001; 19). Additionally, Maxfield (1995) supports that political authorities favour CBI where there is need for funds. When this need is high as he explains, the government delegates more authority to the central bank in order to signal the nations creditworthiness. Finally, the cases of countries that have experienced extremely high levels of inflation in the past, like Germany, Austria, and Brazil, show that such countries are more likely to delegate independence to a central bank so that politicians do not interfere with monetary policy. 3.3 The measurement of the CBI Index Due to the widespread concept that the degree of independence of a nations central bank plays a crucial role upon the policy actions and inflation, Cukierman (1992) presents an analysis of the effects of CBI on inflation and provides various indicators of CBI. However, as he explains, the degree of CBI is determined by several factors from legal to cultural some of which are difficult to measure and quantify, therefore the impact of CBI on inflation varies among countries and there is a certain degree of uncertainty about the level of CBI. As a result, the measurement and the creation of an index of CBI have been based on legal independence, as the degree of CBI also depends on the degree of independence granted to the bank by the law. Despite the variations in the degree of CBI, it can be deduced that a low degree of CBI is linked with higher levels of inflation and inflation variability, while the level of credibility of a central bank with a low degree of CBI will be lower. Cukierman presents three different sets of indicators of CBI; a proxy for legal independence and proxies for the deviations of actual from legal independence. Independence measured under these proxies is limited specifically to the Central banks ability to meet a single objective; price stability. The reason for using several proxies in measuring CBI is because each proxy is a noisy indicator that captures a somewhat different aspect of CB independence (Cukierman, 1992; 370), so using a combination of them reduces this noisiness of the overall measure 3.3.1 Measuring and Coding Legal Central Bank Independence Using a proxy of legal independence is vital in making comparisons with previous studies on the impact of CBI on economic issues because all existing attempts on the features of an independent central bank rely on the banks legal independence. Cukierman presents the indices of legal aspects of CBI by separating into four groups the variables which make for a legally independent central bank. These groups are: Chief executive officer: CEO Policy formulation: PF Final Objectives: OBJ Limitations on lending: LLand codes them by the degree of independence of each group for the central bank of each of the countries included in the study. The main assumptions made are; the central banks whose single objective is price stability are considered to be more independent, so are central banks with stricter limitations on lending from the CB. The coding involves sixteen different variables in a scale from 0 (least independence) to 1 (maximum independence), during the time period 1950-1989, separated into four different decades. Due to the narrow definition of each of the variables used and the consequent lack of precision and multicollinearity problems that may arise, these variables are aggregated into eight legal variables by just calculating the unweighted mean of the codings used. Furthermore, it is necessary to have an additional single index of legal independence for each country to assess the aggregate legal independence of the CB. This index can have two alternatives, the LVAU and the LVAW, that are computed by calculating the average of the codings of the first eight variables as described above. Table 1 in Appendix A shows the ranking of the countries according to the legal independence of their central banks as measured by the LVAU during the eighties decade. The LVAW would also give a similar picture. Looking at the table of results one can see that among the seven most highly-ranked countries four are developed (Switzerland, West Germany, Austria and U.S.), while among the seven least-ranked countries four are less developed (Morocco, Panama, Yugoslavia and Poland). Generally, the top 10% of the rankings is comprised of developed countries, whereas the bottom 10% is concentrated with less developed countries. One should also note that there had been no hyperinflation experienced by developed countries during the 1980s, while some of the Latin America countries have, e.g. Brazil and Bolivia with a rate of 230%. This according to Cukierman may suggest that legal CBI may be neither necessary nor sufficient for low inflation. (1992; 382). 3.3.2 The turnover rate of Central Bank governors as a proxy for actual independence As already explained, the legal status of the central bank is just one of the several determinants of actual CBI. There is no clear systematic indicator of actual CBI, but Cukierman (1992) presents two sets of such indicators. One is based on the actual turnover rate of the central banks governor, and the other is based on the answers given to a questionnaire on CBI. Table 2 in Appendix B shows the CB governors turnover rates for the period 1980-1989. It is assumed that the lower the turnover rate the higher the degree of actual independence. Although the results are chronologically old, it is obvious that turnover rates in less developed countries occupy a range that has never been experienced by developed countries. It is indicative that more than half of the less developed countries have a turnover rate higher than the maximum of the rate of developed countries. It is clear that less developed countries experience higher inflation rates, on the grounds of lower actual CBI. On the other hand, low turnover does not necessarily imply a high level of CB independence on the grounds that a relatively subservient governor will tend to stay in office longer than a governor who stands up to the executive branch. (Cukierman, 1992; 385) Critically assessing the results, since the maximum turnover rate for developed countries is 0.2 (.e. five years) suggests that the turnover proxy may not be effective proxies for actual CBI for the sample of developed countries, whereas this proxy can be considered indicative for the sample of developing countries since these have turnover rates exceeding 0.2. 3.3.3 Central Bank Independence from answers to a questionnaire Another aspect of characterizing CBI is the questionnaire. Under this method, answers were obtained from qualified central bankers from twenty-four countries during the period 1980-1989. The main questions asked covered the issues of; legal independence, final monetary policy objectives, monetary policy instruments, actual independence and its divergence from the law and intermediate targets and their indicators. In coding the variables of the questionnaire, the bank is assumed to be more independent, all other things being equal, if the following hold; the term of office of the CB governor is longer than that of the government, limitations exist on lending from the CB which the government is in no position of altering, and in cases where stock targets exist because these mean that the CB is more free to meet its price stability target. Table 3 in Appendix C shows the ranking of central banks by aggregate indices of independence according to questionnaire responses. The aggregate indices of QVAU and QVAW reflect the law and the way it is implemented in practice respectively, as well as important information about actual independence, and are very similar (à ?=0.99). The rankings agree to earlier studies that central banks of developed countries are more independent. However, the median of QVAU for developed countries, that is 0.6 for Britain and Lebanon, is greater than the median for less developed countries, that is 0.49 for Uruguay, and this contradicts the above findings for legal independence using the LVAU. When measuring the degree of CBI it should be taken into account that the measures used above fail to quantify all the aspects of CBI as some are difficult to quantify. Such aspects are the quality of the banks research department and its standing in comparison to other economic research institutions within the public sector (Cukierman, 1992). Independence is generally higher in countries with highly-developed financial markets according to Cukierman because the supervision of financial institutions is under the authority of the CB, so the larger the market the more wide the span of the CBs authority. 4. Central Bank Independence and Inflation Targeting In this section the impact of central bank independence on inflation, inflation variability and the economy overall is analyzed using a model to test whether CBI can actually lower inflation, and comparing the effects of CBI by using both the Cukierman and the Alesina indices of CBI. Additionally, the costs of achieving lower inflation through central bank independence are also explained. MacCallum, B. (1995) believes that it is strong will that is necessary for proper policy behaviour by central banks, not rules and regulations. A policy maker, i.e. a central banker in this case should act immediately to an inflation shock to restore the problem without letting any sp