EconPapers    
Economics at your fingertips  
 

Political economy behind central bank independence

Anastasia Burkovskaya

Journal of Macroeconomics, 2019, vol. 61, issue C, -

Abstract: This paper proposes a model that analyzes the reasons behind the establishment and persistence of central bank independence (CBI) in a competitive democracy where both incumbent and opposition parties have the right to veto the delegation of monetary policy. We show that in a country with a high level of corruption, the opposition party uses the absence of CBI to keep the economy unstable to increase its own chances of getting elected. The model also predicts persistence of CBI once it is established, due to the incumbent’s fear of losing the office if the autonomy is removed.

Keywords: Central bank independence; Political business cycles; Democracy (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0164070418301484
Full text for ScienceDirect subscribers only

Related works:
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:eee:jmacro:v:61:y:2019:i:c:10

DOI: 10.1016/j.jmacro.2019.103121

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:jmacro:v:61:y:2019:i:c:10