Abstract:

The countries are trying to have a high level of prosperity in society. However, many countries, including mainly developing countries, are sometimes unable to the desired goal as a result of the devastating effects of the crises and the wrong economic policies implemented. With the negative impact of economic performance from the past to the present day, one of the major problems faced by the countries was high inflation. This problem needs not only strong macroeconomic performance but also political stability to be solved. Therefore, the existence of properly functioning institutions is a requirement to be able to have solid macroeconomic indicators. In order to resolve the high inflation problem, it is also important that an independent central bank determine the monetary policy away from political pressures. The purpose and vehicle independence of the central bank also brings with it a more effective monetary policy. The central bank also applies the inflation targeting regime while trying to price stability. In the presence of a transparent and reliable central bank, the desired inflation target has also been achieved. This study also revealed that macroeconomic indicators in countries where political stability is provided have been improved and the desired goal has been achieved.

Keywords: