Median Voter Preferences, Central Bank Independence and Conservatism
AbstractThis paper studies how the independence and the conservatism of a central bank relate to the structure and stability of the median voter preferences. This is done by means of a model of endogenous delegation where an opportunistic policy maker chooses the monetary regime (independence and conservatism) to maximise the welfare of the median voter. The results show that a high degree of inflation aversion of monetary policy is not necessarily associated with a high degree of central bank independence. A high and stable degree of inflation aversion of society (i.e. of the median voter) may lead to establish a dependent central bank that is highly inflation averse. This suggests that the negative correlation between inflation and central bank independence indices detected by several empirical studies may reflect a link between inflation and some deep features of social preferences. Copyright 2000 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 105 (2000)
Issue (Month): 3-4 (December)
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Web page: http://www.springerlink.com/link.asp?id=100332
Other versions of this item:
- Lippi, F., 1999. "Median Voter Preferences, Central Bank Independence and Conservatis," Papers 351, Banca Italia - Servizio di Studi.
- Francesco Lippi, 1999. "Median Voter Preferences, Central Bank Independence and Conservatism," Temi di discussione (Economic working papers) 351, Bank of Italy, Economic Research and International Relations Area.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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