The Political Economy of Monetary Policy Conduct and Central Bank Design

Manfred Gärtner ()

Chapter 24 in Readings in Public Choice and Constitutional Political Economy, 2008, pp 423-446 from Springer

Abstract: There are few areas in which public choice has had as much success in making inroads into mainstream economics and, in particular, in influencing real-life developments as in the design of monetary institutions and the day-to-day conduct of monetary policy. This survey tracks these developments, from the humble beginnings in the 1970s related to Nordhaus’ (1975) account of the opportunistic political business cycle to the widespread academic and political discussion on monetary policy rules and targets of today.2 The next section contains a compact review of the two classical ideas in political macroeconomics, the political business cycle and the inflation bias. We then move on to more modern stochastic models, in which the desire for undistorted stabilization of supply shocks calls for refined remedies to the time-inconsistency problem, such as performance contracts and inflation targets for central banks. The following section moves on to a discussion of current developments that focus on instrument and targeting rules for monetary policy. Finally, we briefly assess these developments.

Keywords: Utility Function; Monetary Policy; Public Choice; Phillips Curve; Performance Contract (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: The political economy of monetary policy conduct and central bank design (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-0-387-75870-1_24

Ordering information: This item can be ordered from
http://www.springer.com/9780387758701

DOI: 10.1007/978-0-387-75870-1_24

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().