Why are Federal Central Banks more Activist?

Hein Roelfsema ()

No 06-06, Working Papers from Utrecht School of Economics

Abstract: This paper analyzes monetary policy making by a committee of regional representatives in a currency union with asymmetric shocks. By considering strategic delegation of monetary policy making, we show that regional representatives in a federal policy making committee may be more activist than the average citizen in their district. Hence, in our model federal central banks such as the ECB and the FED respond more aggressively to output shocks when compared to individual central banks.

Keywords: Central Banking; Asymmetric Shocks; Federations; Strategic Delegation (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:use:tkiwps:0606

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