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The paper discusses recent changes in central bank laws and the relationship between inflation and central bank independence in transition economies. Two indices of legal independence are constructed, covering political and economic aspects of independence. Most of the countries experienced high‐inflation episodes in the recent past and changes introduced to the laws after, or simultaneously, with stabilization programmes strengthened the position of the central banks. In further analysis, an inverse relationship emerges between inflation and indices of central bank independence. However, the robust relationship is present only at a high level of economic liberalization. This conclusion is supported by results from regressions on time‐aggregated and panel data, even after controlling for the government fiscal position and the absence/presence of an IMF stabilization package.

The paper analyzes the recent growth dynamics in China, evaluating both cyclical positions and long-term growth prospects. The analysis shows that financial cycles play a more important role than traditional inflation-based cycles in shaping the dynamics of growth. Currently, the 'finance-neutral' gap-our measure of the financial cycle-is large and positive, reflecting imbalances accumulated in the economy since the Global Financial Crisis. A period of slower growth is therefore both likely and needed in the near term to restore the economy to equilibrium. In the medium term, growth will slow

Cover -- Contents -- I. Introduction -- II. The Maturing of China's Economy -- A. Structural slowdown -- B. On-shoring -- C. Demand Rebalancing -- D. Cyclical slowdown -- III. The Flexible System of Global Models -- Model Overview -- The Real Side -- Prices -- Policy -- IV. Simulation Analysis -- A. Structural Slowing -- Economy-wide structural slowdown -- Tradable-Sector Structural Slowing -- B. On-shoring -- C. Demand Rebalancing -- D. Cyclical Slowdown -- E. Detailed Country-by-Country Total Impacts -- V. Conclusions -- Table 1. Detailed Country-by-Country Spillovers -- Figures -- 1. Economy-Wide Structural Slowing in China-Domestic Impact -- 2. Economy-Wide Structural Slowing in China - Spillovers -- 3. Tradable-Sector Structural Slowing in China - Domestic Impact -- 4. Tradable-Sector Structural Slowing in China - Spillovers -- 5. On-shoring in China- Domestic Impact -- 6. On-shoring in China-Spillovers -- 7. Demand Rebalancing - Domestic Impact -- 8. Demand Rebalancing -Spillovers -- 9. Cyclical Slowing (Financial Stress) - Domestic Impact -- 10. Cyclical Slowing (Financial Stress) - Spillovers -- References

Public debt in the Middle East increased during the mid-1990s mainly because of fiscal expansions. It decreased in recent years, thanks to high oil revenue, economic growth, some primary non-oil fiscal adjustment, and debt relief. While countries in the Middle East appear to have adequately reacted to high indebtedness in the past, public debt levels remain uncomfortably high in many, particularly non-oil producing countries and middle income oil producers. Non-oil countries adjust mainly by increasing revenues, whereas oil countries adjust expenditure. For non-oil producing countries, substan