EconPapers    
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)
https://www.cesifo.org/DocDL/400b.pdf (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: https://EconPapers.repec.org/RePEc:ces:ceswps:_400

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