IDEAS home Printed from https://ideas.repec.org/a/cup/intorg/v58y2004i01p1-34_58.html
   My bibliography  Save this article

Public Inflation Aversion and the Political Economy of Macroeconomic Policymaking

Author

Listed:
  • Scheve, Kenneth

Abstract

Do the macroeconomic priorities of citizens differ across countries? If so, what accounts for this variation and what are its consequences for explanations of the choice of monetary institutions, macroeconomic policy, and international monetary cooperation? This article uses survey data from twenty advanced economies to examine individual preferences about macroeconomic priorities. The analysis establishes three key findings. First, the results suggest that economic context, defined by inflation and unemployment performance, has a substantial impact on the public's economic objectives in a way that is broadly consistent with the specification of utility/loss functions in the theoretical political economy literature. Second, the results suggest that there is significant cross-country variation in inflation aversion, controlling for economic context. Third, some of this variation is accounted for by national-level factors affecting the aggregate costs of inflation and unemployment. These results have significant implications for optimal monetary policymaking, the explanation of variation in economic outcomes, and for accounts of the choice of institutional frameworks for policymaking.I thank the Bank of England, the Center for Basic Research in the Social Sciences, and the Institution for Social and Policy Studies for research support, and Jim Alt, Andrew Bailey, Bill Bernhard, Lawrence Broz, John Freeman, Jeff Frieden, Jim Granato, Shigeo Hirano, David Lake, Jeff Lax, Simon Price, Rose Razaghian, Ron Rogowski, David Stasavage, Gabriel Sterne, Mike Tomz, Jim Vreeland, the editor, and two anonymous reviewers for helpful comments. All views expressed are those of the author and do not represent those of the Bank of England.

Suggested Citation

  • Scheve, Kenneth, 2004. "Public Inflation Aversion and the Political Economy of Macroeconomic Policymaking," International Organization, Cambridge University Press, vol. 58(1), pages 1-34, February.
  • Handle: RePEc:cup:intorg:v:58:y:2004:i:01:p:1-34_58
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0020818304581018/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Etienne Farvaque & Muhammad Azmat Hayat & Alexander Mihailov, 2017. "Who Supports the ECB? Evidence from Eurobarometer Survey Data," The World Economy, Wiley Blackwell, vol. 40(4), pages 654-677, April.
    2. Hayo, Bernd & Neuenkirch, Edith, 2014. "The German public and its trust in the ECB: The role of knowledge and information search," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 286-303.
    3. Etienne Farvaque & Alexander Mihailov, 2008. "Intergenerational Transmission of Inflation Aversion: Theory and Evidence," Economics & Management Discussion Papers em-dp2008-71, Henley Business School, Reading University.
    4. Heinz Welsch & Jan K¨¹hling, 2015. "Macroeconomic Preferences by Income and Education Level: Evidence from Subjective Well-Being Data," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 15-32, August.
    5. Heinemann, Friedrich & Osterloh, Steffen & Kalb, Alexander, 2014. "Sovereign risk premia: The link between fiscal rules and stability culture," Journal of International Money and Finance, Elsevier, vol. 41(C), pages 110-127.
    6. Heinz Welsch & Jan Kühling, 2011. "Anti-Inflation Policy Benefits the Poor: Evidence from Subjective Well-Being Data," Working Papers V-343-11, University of Oldenburg, Department of Economics, revised Dec 2011.
    7. Carsten Hefeker & Michael Neugart, 2015. "Fiscal Transfers in a Monetary Union with Exit Option," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 489-508, August.
    8. Berlemann, Michael, 2014. "Inflation aversion in transition countries: Empirical evidence from the Baltic States," Economic Systems, Elsevier, vol. 38(3), pages 415-432.
    9. Diouf, Ibrahima & Pépin, Dominique, 2017. "Gender and central banking," Economic Modelling, Elsevier, vol. 61(C), pages 193-206.
    10. Montserrat Ferre & Carolina Manzano, 2012. "Designing the optimal conservativeness of the central bank," Economics Bulletin, AccessEcon, vol. 32(2), pages 1461-1473.
    11. repec:zbw:hohpro:343 is not listed on IDEAS
    12. Adriel Jost, 2018. "Cultural Differences in Monetary Policy Preferences," Working Papers 2018-02, Swiss National Bank.
    13. Ehrmann, Michael & Tzamourani, Panagiota, 2012. "Memories of high inflation," European Journal of Political Economy, Elsevier, vol. 28(2), pages 174-191.
    14. Braun, Benjamin, 2016. "Speaking to the people? Money, trust, and central bank legitimacy in the age of quantitative easing," MPIfG Discussion Paper 16/12, Max Planck Institute for the Study of Societies.
    15. repec:old:wpaper:343 is not listed on IDEAS
    16. Carsten Hefeker & Michael Neugart, 2015. "Fiscal Transfers in a Monetary Union with Exit Option," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 489-508, August.
    17. Dreher, Axel & Sturm, Jan-Egbert & Haan, Jakob de, 2010. "When is a central bank governor replaced? Evidence based on a new data set," Journal of Macroeconomics, Elsevier, vol. 32(3), pages 766-781, September.
    18. Neuenkirch, Matthias, 2014. "Are public preferences reflected in monetary policy reaction functions?," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 60-68.
    19. Sousa, Pedro, 2009. "Do ECB Council Decisions represent always a Real Euro Consensus?," Working Papers 9/2009, Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE).
    20. MichaelBerlemann & SörenEnkelmann, 2013. "Die „German Angst“ – Inflationsaversion in Ost- und Westdeutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(02), pages 03-09, April.
    21. Goodhart, Lucy, 2013. "Who Decides? Coalition Governance and Ministerial Discretion," Quarterly Journal of Political Science, now publishers, vol. 8(3), pages 205-237, June.
    22. Hayat, Muhammad Azmat & Farvaque, Etienne, 2012. "Public attitudes towards central bank independence: Lessons from the foundation of the ECB," European Journal of Political Economy, Elsevier, vol. 28(4), pages 512-523.
    23. repec:eee:poleco:v:59:y:2019:i:c:p:212-229 is not listed on IDEAS
    24. Kim, Iljoong & Kim, Inbae, 2008. "Interest group pressure explanations for the yen-dollar exchange rate movements: Focusing on the 1980s," Journal of the Japanese and International Economies, Elsevier, vol. 22(3), pages 364-382, September.
    25. Diouf, Ibrahima & Pépin, Dominique, 2017. "Gender and central banking," Economic Modelling, Elsevier, vol. 61(C), pages 193-206.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:intorg:v:58:y:2004:i:01:p:1-34_58. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: https://www.cambridge.org/ino .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.