Institutional Checks and Balances and the Political Control of the Money Supply
AbstractThe Nordhaus hypothesis about the political business cycle asserts that elected politicians have incentives to expand the money supply prior to elections to stimulate the economy and thereby engineer their reelection. Central bank independence is widely regarded as an institutional solution to this problem. However, this solution works only if central bankers are not perfect agents of their political principals, perhaps because they are conservative (more inflation-averse). This article proposes an alternative solution: political business cycles may be obstructed by institutional checks and balances. The analysis applies to the Deutsche Bundesbank and has implications for the institutional structure of the future European Central Bank. Copyright 1998 by Royal Economic Society.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 50 (1998)
Issue (Month): 3 (July)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Jorge M. Streb & Alejandro Saporiti, 2003.
"Separation of Powers and Political Budget Cycles,"
CEMA Working Papers: Serie Documentos de Trabajo.
251, Universidad del CEMA.
- Raffaela Giordano & Pietro Tommasino, 2009.
"What determines debt intolerance? The role of political and monetary institutions,"
Temi di discussione (Economic working papers)
700, Bank of Italy, Economic Research and International Relations Area.
- Giordano, Raffaela & Tommasino, Pietro, 2011. "What determines debt intolerance? The role of political and monetary institutions," European Journal of Political Economy, Elsevier, vol. 27(3), pages 471-484, September.
- Gartner, Manfred, 1999. "The election cycle in the inflation bias: evidence from the G-7 countries," European Journal of Political Economy, Elsevier, vol. 15(4), pages 705-725, November.
- Fabio Padovano & Grazia Sgarra & Nadia Fiorino, 2003. "Judicial Branch, Checks and Balances and Political Accountability," Constitutional Political Economy, Springer, vol. 14(1), pages 47-70, March.
- Lucotte, Yannick, 2010.
"The choice of adopting inflation targeting in emerging economies: Do domestic institutions matter?,"
27118, University Library of Munich, Germany.
- Yannick Lucotte, 2010. "The choice of adopting inflation targeting in emerging economies: Do domestic institutions matter?," Post-Print hal-00539713, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.