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Goal-Independent Central Banks Why Politicians Decide to Delegate

A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictio...

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Bibliographic Details
Main Author: Crowe, Christopher
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2006
Series:IMF Working Papers
Subjects:
Depository Institutions
Inflation
Treatment Effect Models
Income
Banks
Banks And Banking
Personal Income
Deflation
Noncooperative Games
Micro Finance Institutions
Mortgages
Personal Income, Wealth, And Their Distributions
National Accounts
Central Banks
Price Level
Models Of Political Processes: Rent-seeking, Elections, Legislatures, And Voting Behavior
Prices
Macroeconomics
Banking
Multiple Or Simultaneous Equation Models: Cross-sectional Models
Central Banks And Their Policies
Central Bank Autonomy
Spatial Models
South Africa
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictions. Case studies, drawn from several countries' recent past and the nineteenth-century United States, provide further support. Finally, the model explains why the expected negative relationship between CBI and inflation is not empirically robust: endogenous selection biases the estimated effect towards zero. The data confirm this
Physical Description:41 pages
ISBN:9781451865165

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