Economics at your fingertips  

Equilibrium Contracts for the Central Bank of a Monetary Union

Avinash Dixit () and Henrik Jensen ()

No 400, CESifo Working Paper Series from CESifo

Abstract: We consider the political economy of a monetary union where member governments attempt to influence the policy of the common central bank. Modeling this as a common agency with incentive contracts, we show that if incentives are all that matters for the bank, the equilibrium implements a weighted average of the countries‘ most preferred policy. We then argue that making the bank inflation averse and/or attentive towards the countries‘ economic developments is undesirable in this context.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16) Track citations by RSS feed

Downloads: (external link) (application/pdf)

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:

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

Page updated 2020-09-22
Handle: RePEc:ces:ceswps:_400