The politics of central bank independence
Subtitle: a theory of pandering and learning in government
By: Gauti Eggertsson and Eric Le Borgne.
Contributors: Le Borgne, Eric.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 205; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 205.
Publisher: Federal Reserve Bank of New York
Published: 2005
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Banks and banking, Central; Monetary policy.; Politicians.; Delegation of authority.
Description: "We propose a theory to explain why, and under what circumstances, a politician endogenously gives up rent and delegates policy tasks to an independent agency. Applied to monetary policy, this theory (i) formalizes the rationale for delegation highlighted by Alexander Hamilton, the first Secretary of the Treasury of the United States, and by Alan S. Blinder, former Vice Chairman of the Board of Governors of the Federal Reserve System; and (ii) does not rely on the inflation bias that underlies most existing theories of central bank independence.  Delegation trades off the cost of having a possibly incompetent technocrat with a long-term job contract against the benefit of having a technocrat who (i) invests more effort into the specialized policy task and (ii) has less incentive to pander to public opinion than a politician. Our key theoretical predictions are broadly consistent with the data"--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 3/23/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.