Goal independent central banks: Why politicians decide to delegate
A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictions. The model also explains why the expected negative relationship between CBI and inflation is not empirically robust: endogenous selection biases the estimated effect towards zero. The data confirm this.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ray, Debraj & Vohra, Rajiv, 1999.
"A Theory of Endogenous Coalition Structures,"
Games and Economic Behavior,
Elsevier, vol. 26(2), pages 286-336, January.
- Ray, D. & Vohra, R., 1996. "A Theory of Endogenous Coalition Structure," Papers 68, Boston University - Industry Studies Programme.
- Debraj Ray & Rajiv Vohra, 1996. "A Theory of Endogenous Coalition Structure," Papers 0068, Boston University - Industry Studies Programme.
- Debraj Ray & Rajiv Vohra, 1998. "A Theory of Endogenous Coalition Structures," Working Papers 98-1, Brown University, Department of Economics, revised Jan 1998.
- Hayo, Bernd, 1998. "Inflation culture, central bank independence and price stability," European Journal of Political Economy, Elsevier, vol. 14(2), pages 241-263, May.
- Martin J Osborne & Ariel Rubinstein, 2009.
"A Course in Game Theory,"
814577000000000225, UCLA Department of Economics.
- Christopher W. Crowe, 2006.
"Goal-Independent Central Banks; Why Politicians Decide to Delegate,"
IMF Working Papers
06/256, International Monetary Fund.
- Crowe, Christopher, 2008. "Goal independent central banks: Why politicians decide to delegate," European Journal of Political Economy, Elsevier, vol. 24(4), pages 748-762, December.
- Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
- Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-67, March.
- Levy, Gilat, 2004.
"A model of political parties,"
Journal of Economic Theory,
Elsevier, vol. 115(2), pages 250-277, April.
- Gauti B. Eggertsson & Eric Le Borgne, 2010.
"A Political Agency Theory of Central Bank Independence,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 42(4), pages 647-677, 06.
- Gauti B. Eggertsson & Eric Le Borgne, 2003. "A Political Agency Theory of Central Bank Independence," IMF Working Papers 03/144, International Monetary Fund.
- Milesi-Ferretti, Gian Maria, 1994. "Wage Indexation and Time Consistency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 941-50, November.
- Vishnu Padayachee, 2001. "Central Bank transformation in a globalized world: the Reserve Bank in post-apartheid South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 741-765.
- Demange, G., 1991.
"Intermediate Preferences and Stable Coalition Structures,"
DELTA Working Papers
91-16, DELTA (Ecole normale supérieure).
- Demange, Gabrielle, 1994. "Intermediate preferences and stable coalition structures," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 45-58, January.
- Gabrielle Demange, 1994. "Intermediate Preferences and Stable Coalition Structures," Post-Print halshs-00670920, HAL.
- Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
- Moser, Peter, 1999. "Checks and balances, and the supply of central bank independence," European Economic Review, Elsevier, vol. 43(8), pages 1569-1593, August.
- Eijffinger, S. & De Hann, J., 1995.
"The Political Economy of Central Bank Independence,"
9587, Tilburg - Center for Economic Research.
- Eijffinger, S-C-W & de Haan, J, 1996. "The Political Economy of Central-Bank Independence," Princeton Studies in International Economics 19, International Economics Section, Departement of Economics Princeton University,.
- Guy Debelle & Stanley Fischer, 1994.
"How independent should a central bank be?,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston, vol. 38, pages 195-225.
- Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, vol. 14(1), pages 90-123, May.
- Keith Jaggers & Ted Robert Gurr, 1995. "Tracking Democracy's Third Wave with the Polity III Data," Journal of Peace Research, Peace Research Institute Oslo, vol. 32(4), pages 469-482, November.
- Bernhard, William & Leblang, David, 2002. "Political Parties and Monetary Commitments," International Organization, Cambridge University Press, vol. 56(04), pages 803-830, September.
- McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, vol. 52(3), pages 647-63, May.
When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:24:y:2008:i:4:p:748-762. 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: (Zhang, Lei)
If references are entirely missing, you can add them using this form.