Policy Games and the Optimal Design of Central Banks

Andrew Hughes Hallett and Diana Weymark ()

No 220, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: This article studies the impact of alternative institutional configurations on economic performance when there is strategic interaction between the government and the central bank. The interaction between the fiscal and monetary authorities is modeled as a non-cooperative two-stage game. The institutions within which monetary and fiscal policies are implemented are represented by the degree of central bank independence, the degree of central bank conservatism, and the relative timing of fiscal and monetary policies. The four representative regimes considered capture the distinguishing features of monetary institutions in the United States, Switzerland, the European Union, and the United Kingdom.

Keywords: Central bank design; central bank independence; monetary policy delegation; policy coordination; policy game (search for similar items in EconPapers)
JEL-codes: E52 E61 F42 (search for similar items in EconPapers)
Date: 2002-08
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0220

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