Who wants an independent central bank? Monetary policy-making and politics

F G Ozkan

Who wants an independent central bank? Monetary policy-making and politics

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

The costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business-cycles model. It is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy-making. More specifically, right-wing parties favour independent central banks more than left-wing parties. An independent central bank is also the generally preferred option from a social welfare point of view. In addition, the form of policy-making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles.

Original language	English
Pages (from-to)	621-643
Number of pages	23
Journal	Scandinavian Journal of Economics
Volume	102
Issue number	4
Publication status	Published - 2000

Keywords

cooperation
monetary and fiscal authorities
independent central banks
partisan cycles
MACROECONOMIC POLICY
DISCRETION
CYCLES
GAME

Cite this

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AB - The costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business-cycles model. It is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy-making. More specifically, right-wing parties favour independent central banks more than left-wing parties. An independent central bank is also the generally preferred option from a social welfare point of view. In addition, the form of policy-making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles.

KW - cooperation

KW - monetary and fiscal authorities

KW - independent central banks

KW - partisan cycles

KW - MACROECONOMIC POLICY

KW - DISCRETION

KW - CYCLES

KW - GAME

M3 - Article

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VL - 102

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EP - 643

JO - Scandinavian Journal of Economics

JF - Scandinavian Journal of Economics

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