Bashing and Coercion in Monetary Policy
AbstractPolitical pressure, or "bashing," by the administration is typically believed to be one way that the administration can coerce an otherwise independent central bank into following the administration's preferred monetary policy path. This paper develops a model for analyzing this type of policy "cooperation" and demonstrates that bashing the central bank creates uncertainty on the part of private agents with regard to future policy actions, which translates into real wage and output variability. Hence, although beneficial to the administration, political pressure creates uncertainty and thus economic instability. Copyright 1991 by Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 29 (1991)
Issue (Month): 1 (January)
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- Philipp Maier & Saskia Bezoen, 2002.
"Central bank bashing: The case of the European Central Bank,"
MEB Series (discontinued)
2002-18, Netherlands Central Bank, Monetary and Economic Policy Department.
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- Hayat, Muhammad Azmat & Farvaque, Etienne, 2012.
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- Maier, Philipp & Bezoen, Saskia, 2004. "Bashing and supporting central banks: the Bundesbank and the European Central Bank," European Journal of Political Economy, Elsevier, vol. 20(4), pages 923-939, November.
- M.A. Jenkins, 1996. "Central bank independence and inflation performance: panacea or placebo?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 49(197), pages 241-270.
- Garcia De Paso, Jose I., 2000. "Partisan Appointments to the Central Bank: Policy Uncertainty and the Democratic Deficit," Journal of Macroeconomics, Elsevier, vol. 22(3), pages 471-489, July.
- Donato Masciandaro, 1995. "Designing a central bank: Social player, monetary agent, or banking agent?," Open Economies Review, Springer, vol. 6(4), pages 399-410, October.
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