Monetary Politics in a Monetary Union: A Note on Common Agency with Rational Expectations

Michele Ruta

No 2007/21, RSCAS Working Papers from European University Institute

Abstract: Is the politicisation of monetary policy in a currency union desirable? This paper shows that in a setting where political influence by national governments is modeled as a common agency game with rational expectations, the answer to this question crucially depends on whether the common central bank can commit to follow its policy.

Keywords: Common Agency; Political Pressures; European Monetary Union (search for similar items in EconPapers)
JEL-codes: D78 E58 F33 (search for similar items in EconPapers)
Date: 2007-09-28
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pol
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Journal Article: Monetary politics in a monetary union: A note on common agency with rational expectations (2008)
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