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The Political Economy of Monetary Institutions

Author

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  • Bernhard, William
  • Broz, J. Lawrence
  • Clark, William Roberts

Abstract

In recent decades, countries have experimented with a variety of monetary institutions, including alternative exchange-rate arrangements and different levels of central bank independence. Political economists have analyzed the choice of these institutions, emphasizing their role in resolving both the time-inconsistency problem and dilemmas created by an open economy. This “first-generation” work, however, suffers from a central limitation: it studies exchange-rate regimes and central bank institutions in isolation from one another without investigating how one monetary institution affects the costs and benefits of the other. By contrast, the contributors to this volume analyze the choice of exchange-rate regime and central bank independence together and, in so doing, present a “second generation” of research on the determinants of monetary institutions. The articles incorporate both economic and political factors in explaining the choice of monetary institutions, investigating how political institutions, democratic processes, political party competition, and interest group pressures affect the balance between economic and distributional policy objectives.

Suggested Citation

  • Bernhard, William & Broz, J. Lawrence & Clark, William Roberts, 2002. "The Political Economy of Monetary Institutions," International Organization, Cambridge University Press, vol. 56(04), pages 693-723, September.
  • Handle: RePEc:cup:intorg:v:56:y:2002:i:04:p:693-723_44
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    Cited by:

    1. Plümper, Thomas & Neumayer, Eric, 2008. "Exchange rate regime choice with multiple key currencies," LSE Research Online Documents on Economics 25164, London School of Economics and Political Science, LSE Library.
    2. Hossain, Monzur, 2009. "Institutional development and the choice of exchange rate regime: A cross-country analysis," Journal of the Japanese and International Economies, Elsevier, vol. 23(1), pages 56-70, March.
    3. de Haan, J. & Eijffinger, Sylvester, 2016. "The Politics of Central Bank Independence," Discussion Paper 2016-047, Tilburg University, Center for Economic Research.
    4. Edwards, Sebastian & Magendzo, I. Igal, 2006. "Strict Dollarization and Economic Performance: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(1), pages 269-282, February.
    5. Troeger, Vera & Schneider, Christina J., 2012. "Strategic Budgeteering and Debt Allocation," CAGE Online Working Paper Series 85, Competitive Advantage in the Global Economy (CAGE).
    6. Matias Vernengo, 2008. "The Political Economy of Monetary Institutions in Brazil: The Limits of the Inflation-targeting Strategy, 1999-2005," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 95-110.
    7. Singleton,John, 2010. "Central Banking in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521899093, May.
    8. Sadeh, Tal, 2011. "Central banks' priorities and the left/right partisanship of exchange rates," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 183-194, March.
    9. Troeger, Vera, 2012. "Monetary Policy Flixibility in floating Exchange Rate Regimes: Currency Denomination and Import Shares," CAGE Online Working Paper Series 82, Competitive Advantage in the Global Economy (CAGE).
    10. Guisinger, Alexandra & Singer, David Andrew, 2010. "Exchange Rate Proclamations and Inflation-Fighting Credibility," International Organization, Cambridge University Press, vol. 64(02), pages 313-337, April.
    11. Meseguer, Covadonga, 2006. "Learning and economic policy choices," European Journal of Political Economy, Elsevier, vol. 22(1), pages 156-178, March.
    12. Plümper, Thomas & Neumayer, Eric, 2011. "Fear of floating and de facto exchange rate pegs with multiple key currencies," LSE Research Online Documents on Economics 40052, London School of Economics and Political Science, LSE Library.

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