Bargaining over monetary policy in a monetary union and the case of appointing an independent central banker

Corinne Aaron-Cureau and Hubert Kempf ()
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Corinne Aaron-Cureau: LARGE - Laboratoire de recherche en gestion et économie - Université Louis Pasteur - Strasbourg I - Université Robert Schuman - Strasbourg III

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We set up a model of a monetary union where decisions over monetary policy are made through bargaining between two governments with different objectives. Theycan either choose to directly bargain over monetary policy or to delegate monetary decisions to an independent central banker. In the latter case, the choice of the central banker is obtained by bargaining between the two governments. We show that, thebargaining power being constant, the delegation of monetary policy to an independent central banker does not necessarily incur a smaller inflation bias nor is systematically welfare improving for any government. It may happen that both governments are better-off when they directly bargain.

Keywords: Central Bank Independence; Monetary Union; Bargaining (search for similar items in EconPapers)
Date: 2006-01
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Citations: View citations in EconPapers (6)

Published in Oxford Economic Papers, 2006, 58 (1), pp.1-27. ⟨10.1093/oep/gpi044⟩

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Related works:
Journal Article: Bargaining over monetary policy in a monetary union and the case for appointing an independent central banker (2006)
Working Paper: Bargaining over monetary policy in a monetary union and the case of appointing an independent central banker (2006)
Working Paper: Bargaining over monetary policy in a monetary union and the case for appointing an independent central banker (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00177255

DOI: 10.1093/oep/gpi044

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