Fiscal and monetary institutions and policies: onward and upward?
Purpose – The latest generation of research into macroeconomic policy has turned from more technical aspects of optimal control and expectations formation to consideration of the policymaking institutions themselves. More and more countries have moved towards greater degrees of central bank independence, including many developing economies as well the member countries of the European Central Bank. What still is not generally settled among economists is how to measure the stance of policy and the institutional features of the policymaking process. The purpose of this paper is to assess prevailing monetary and fiscal policies. Design/methodology/approach – The paper takes the form of a review encompassing many different measurements of policy stance and policymaking processes. The authors begin with monetary policy followed by an analysis of central bank institutions. The next sections turn to fiscal policy and the need to adjust budget balance for the state of the business cycle. There is then a brief concluding section. Findings – The authors show in this review that fiscal and monetary rules, and economists' understanding of them, have changed substantially over the years. While on one level there is greater consensus, there have been new questions raised in the process that leave plenty of room for further ongoing research in these key policy areas as well as the optimal design of the design of the monetary and fiscal institutions concerned. Originality/value – The paper provides a review of the existing literature updated and applied with reference to recent events, including the global financial crisis.
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.
Volume (Year): 3 (2011)
Issue (Month): 4 (November)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/jfep.htm Email:
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.:
- Brumm, Harold J., 2011. "Inflation and central bank independence: Two-way causality?," Economics Letters, Elsevier, vol. 111(3), pages 220-222, June.
- Richard Clarida & Jordi Gali & Mark Gertler, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective,"
NBER Working Papers
7147, National Bureau of Economic Research, Inc.
- Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
- Richard Clarida & Jordi Galí & Mark Gertler, 1997. "The science of monetary policy: A new Keynesian perspective," Economics Working Papers 356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
- Clarida, R. & Gali, J. & Gertler, M., 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Working Papers 99-13, C.V. Starr Center for Applied Economics, New York University.
- Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
- Siklos,Pierre L., 2006.
"The Changing Face of Central Banking,"
Cambridge University Press, number 9780521034494, Junio.
- Pierre L. Siklos, 2010.
"Revisiting the Coyne Affair: a singular event that changed the course of Canadian monetary history,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 43(3), pages 994-1015, August.
- Pierre Siklos, 2007. "Revisiting the Coyne Affair: A Singular Event That Changed the Course of Canadian Monetary History," Working Papers eg0047, Wilfrid Laurier University, Department of Economics, revised 2007.
- Walsh, Carl E., 2005. "Endogenous objectives and the evaluation of targeting rules for monetary policy," Journal of Monetary Economics, Elsevier, vol. 52(5), pages 889-911, July.
- Pierre Siklos & Martin Bohl, 2009.
"Asset Prices as Indicators of Euro Area Monetary Policy: An Empirical Assessment of Their Role in a Taylor Rule,"
Open Economies Review,
Springer, vol. 20(1), pages 39-59, February.
- P. Siklos & M. Bohl, 2006. "Asset Prices as Indicators of Euro Area Monetary Policy: An Empirical Assessment of Their Role in a Taylor Rule," Working Papers eg0053, Wilfrid Laurier University, Department of Economics, revised 2006.
- Pierre L. Siklos & Martin T. Bohl, 2007. "Asset Prices as Indicators of Euro Area Monetary Policy: An Empirical Assessment of Their Role in a Taylor Rule," Working Paper Series 32_07, The Rimini Centre for Economic Analysis.
- Bernard J Laurens & Martin Sommer & Marco Arnone & Jean-FranÃ§ois Segalotto, 2007.
"Central Bank Autonomy; Lessons from Global Trends,"
IMF Working Papers
07/88, International Monetary Fund.
- Banaian, King & Burdekin, Richard C K & Willett, Thomas D, 1998. "Reconsidering the Principal Components of Central Bank Independence: The More the Merrier?," Public Choice, Springer, vol. 97(1-2), pages 1-12, October.
- Brumm, Harold J., 2006. "The effect of central bank independence on inflation in developing countries," Economics Letters, Elsevier, vol. 90(2), pages 189-193, February.
- Alpanda, Sami & Honig, Adam, 2010. "Political monetary cycles and a de facto ranking of central bank independence," Journal of International Money and Finance, Elsevier, vol. 29(6), pages 1003-1023, October.
- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
- Burdekin, Richard C K & Laney, Leroy O, 1988. "Fiscal Policymaking and the Central Bank Institutional Constraint," Kyklos, Wiley Blackwell, vol. 41(4), pages 647-62.
- Carl E. Walsh, 2011. "Central Bank Independence Revisited," Economic Papers, The Economic Society of Australia, vol. 30(1), pages 18-22, 03.
- Sack, Brian & Wieland, Volker, 2000.
"Interest-rate smoothing and optimal monetary policy: a review of recent empirical evidence,"
Journal of Economics and Business,
Elsevier, vol. 52(1-2), pages 205-228.
- Brian P. Sack & Volker W. Wieland, 1999. "Interest-rate smoothing and optimal monetary policy: a review of recent empirical evidence," Finance and Economics Discussion Series 1999-39, Board of Governors of the Federal Reserve System (U.S.).
- Olivier Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2010.
"Rethinking Macroeconomic Policy,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 42(s1), pages 199-215, 09.
- Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
- Charles Wyplosz, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 64-78, January.
- Christopher Crowe & Ellen E. Meade, 2007. "The Evolution of Central Bank Governance around the World," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 69-90, Fall.
- Goodfriend, Marvin, 2011. "Central banking in the credit turmoil: An assessment of Federal Reserve practice," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 1-12, January.
- René TAPSOBA, 2010.
"Does Inflation Targeting Improve Fiscal Discipline? An Empirical Investigation,"
- René Tapsoba, 2011. "Does Inflation Targeting Improve Fiscal Discipline? An Empirical Investigation," Working Papers halshs-00553329, HAL.
- Andrew Hughes Hallet & Rasmus Kattai & John Lewis, 2007. "Early Warning or Just Wise After the Event?," DNB Working Papers 124, Netherlands Central Bank, Research Department.
- Alt, James E. & Lassen, David Dreyer, 2006. "Fiscal transparency, political parties, and debt in OECD countries," European Economic Review, Elsevier, vol. 50(6), pages 1403-1439, August.
- Bennett T. McCallum, 1999. "Recent developments in the analysis of monetary policy rules," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 3-12.
- Lars E. O. Svensson, 2003.
"What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules,"
Journal of Economic Literature,
American Economic Association, vol. 41(2), pages 426-477, June.
- Lars E. O. Svensson, 2003. "What is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," NBER Working Papers 9421, National Bureau of Economic Research, Inc.
- Banaian, King & Luksetich, William A, 2001. "Central Bank Independence, Economic Freedom, and Inflation Rates," Economic Inquiry, Western Economic Association International, vol. 39(1), pages 149-61, January.
- Eijffinger, Sylvester C W & van der Cruijsen, Carin A B, 2007.
"The Economic Impact of Central Bank Transparency: A Survey,"
CEPR Discussion Papers
6070, C.E.P.R. Discussion Papers.
- van der Cruijsen, C.A.B. & Eijffinger, S.C.W., 2007. "The Economic Impact of Central Bank Transparency : A Survey," Discussion Paper 2007-06, Tilburg University, Center for Economic Research.
- Carin van der Cruijsen & Sylvester Eijffinger, 2007. "The economic impact of central bank transparency: a survey," DNB Working Papers 132, Netherlands Central Bank, Research Department.
- 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.
- Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-62, May.
- Hallerberg, Mark, 2002. "Veto Players and the Choice of Monetary Institutions," International Organization, Cambridge University Press, vol. 56(04), pages 775-802, September.
- Sami Alpanda & Adam Honig, 2009. "The Impact of Central Bank Independence on Political Monetary Cycles in Advanced and Developing Nations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(7), pages 1365-1389, October.
- Massimo Bordignon, 2000. "Problems of Soft Budget Constraints in Intergovernmental Relationships: The Case of Italy," Research Department Publications 3099, Inter-American Development Bank, Research Department.
- Siklos, Pierre L., 2008. "No single definition of central bank independence is right for all countries," European Journal of Political Economy, Elsevier, vol. 24(4), pages 802-816, December.
When requesting a correction, please mention this item's handle: RePEc:eme:jfeppp:v:3:y:2011:i:4:p:340-354. 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: (Virginia Chapman)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.