Global GDP expanded by 5 per cent in 2007, which capped off several years of well above average performance. The US economy had been slowing for a while as concerns mounted over the financial problems, but even into the first quarter of 2008 global GDP was still expanding at 4 per cent.
For example, when central banks in industrialized countries are ranked according to the degree of legal independence of the central bank, those countries with the highest degree of central bank independence are found to have the best inflation performance. 21  19  For an example of how the time-inconsistency problem can be modeled as resulting from political pressure, see Mishkin and Westelius (2006).