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Independence Before Conservatism: Transparency, Politics and Central Bank Design Author info | Abstract | Publisher info | Download info | Related research | Statistics Andrew Hughes Hallett
Diana N. Weymark
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The problem of monetary policy delegation is formulated as a two-stage game between the government and the central bank. In the first stage the government chooses the institutional design of the central bank. Monetary and fiscal policy are implemented in the second stage. When fiscal policy is taken into account, there is a continuum of combinations of central bank independence and conservatism that produce optimal outcomes. This indeterminacy is resolved by appealing to practical considerations. In particular, it is argued that full central bank independence facilitates the greatest degree of policy transparency and political coherence. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2005.
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Article provided by Blackwell Publishing in its journal German Economic Review .
Volume (Year): 6 (2005)
Issue (Month): 1 (02)
Pages: 1-21
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Handle: RePEc:bla:germec:v:6:y:2005:i:1:p:1-21Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=1465-6485
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Paper Andrew Hughes Hallett & Diana N. Weymark, 2002.
"Independence Before Conservatism: Transparency, Politics, and Central Bank Design ,"
Working Papers
0202, Department of Economics, Vanderbilt University.
[Downloadable!] Hughes Hallett, Andrew & Weymark, Diana, 2002.
"Independence before Conservatism: Transparency, Politics and Central Bank Design ,"
CEPR Discussion Papers
3336, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Eijffinger, S. & Schaling, E., 1995.
"The Ultimate Determinants of Central Bank Independence ,"
Discussion Paper
5, Tilburg University, Center for Economic Research.
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Alesina, Alberto & Gatti, Roberta, 1995.
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American Economic Association, vol. 85(2), pages 196-200, May.
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Jon Faust & Lars E.O. Svensson, 1998.
"Transparency and credibility: monetary policy with unobservable goals ,"
International Finance Discussion Papers
605, Board of Governors of the Federal Reserve System (U.S.).
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Other versions:
Faust, J. & Svensson, L.E.O., 1998.
"Transparency and Credibility: Monetary Policy with Unobservable Goals ,"
Papers
636, Stockholm - International Economic Studies.
Faust, Jon & Svensson, Lars E O, 1998.
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NBER Working Papers
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Eijffinger, Sylvester C W & Hoeberichts, Marco, 1998.
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Oxford Economic Papers ,
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Alesina, Alberto & Tabellini, Guido, 1987.
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Andrew Hughes Hallett, 2004.
"Post-Thatcher Fiscal Strategies in the U.K.: An Interpretation ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!]
Ali al-Nowaihi & Paul Levine & Alex Mandilaras, 2006.
"Central Bank Independence and the `Free Lunch Puzzle': A New Perspective ,"
Department of Economics Discussion Papers
0806, Department of Economics, University of Surrey.
[Downloadable!]
Andrew Hallett & Nicola Viegi, 2002.
"Inflation Targeting as a Coordination Device ,"
Open Economies Review ,
Springer, vol. 13(4), pages 341-362, October.
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Huiping Yuan & Stephen M. Miller & Langnan Chen, 2009.
"The Making of Optimal and Consistent Policy: An Analytical Framework for Monetary Models ,"
Working Papers
0909, University of Nevada, Las Vegas , Department of Economics.
[Downloadable!]
Other versions: Andrew Hughes Hallett, 2008.
"Sustainable fiscal policies and budgetary risk under alternative monetary policy arrangements ,"
Economic Change and Restructuring ,
Springer, vol. 41(1), pages 1-28, March.
[Downloadable!] (restricted)
Stephen M. Miller & Huiping Yuan, 2009.
"Consistent Targets and Optimal Monetary Policy: Conservative Central Banker Redux ,"
Working Papers
0908, University of Nevada, Las Vegas , Department of Economics.
[Downloadable!]
Other versions: Huiping Yuan & Stephen M. Miller, 2009.
"Implementing Optimal Monetary Policy: Objectives and Rules ,"
Working Papers
0911, University of Nevada, Las Vegas , Department of Economics.
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Jan Libich & Andrew Hughes Hallett & Petr Stehlik, 2007.
"Monetary And Fiscal Policy Interaction With Various Degrees And Types Of Commitment ,"
CAMA Working Papers
2007-21, Australian National University, Centre for Applied Macroeconomic Analysis.
[Downloadable!]
Other versions: Andrew Hughes Hallett & Diana N. Weymark, 2002.
"Government Leadership and Central Bank Design ,"
Working Papers
0208, Department of Economics, Vanderbilt University, revised Dec 2004.
[Downloadable!]
Other versions: Hughes Hallett, Andrew, 2005.
"In Praise of Fiscal Restraint and Debt Rules. What the Euro Zone Might Do Now ,"
CEPR Discussion Papers
5043, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Andrew Hughes Hallett & Jan Libich, 2007.
"Fiscal-monetary Interactions: The Effect of Fiscal Restraint and Public Monitoring on Central Bank Credibility ,"
Open Economies Review ,
Springer, vol. 18(5), pages 559-576, November.
[Downloadable!] (restricted)
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