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Monetary Policy, Interest Groups, Financial Crisis

  • Pál Péter Kolozsi


    (State Audit Office of Hungary)

The outbreak of the financial and economic crisis in 2007–2008 put an end to the previous consensus on monetary policy. The effects of monetary policy on redistribution have come to the foreground; the modelling and transparency of central bank decisions now require the development of an interpretive framework that allows the complex interpretation of monetary policy decisions in a social context. This paper uses the example of exchange rate policy to explain the effects of central bank decisions on economic variables, the impact of those effects on institutions, and feedback from interest groups on central bank decision-making. Based on Woolley’s typology, this paper considers each of the factors within and outside government, as well as structural and less embedded, non-structural factors that may influence central bank decision-making. The paper concludes that interest groups’ assertion of their interests is not in conflict with central bank independence; it merely serves to represent the preferences of society concerning monetary policy.

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Article provided by State Audit Office of Hungary in its journal Public Finance Quarterly.

Volume (Year): 58 (2013)
Issue (Month): 1 ()
Pages: 35-52

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Handle: RePEc:pfq:journl:v:58:y:2013:i:1:p:35-52
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  1. Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
  2. Pál Péter Kolozsi, 2011. "Libéralisation commerciale et politique de change : possibilités et contraintes dans une petite économie ouverte – le cas de la Hongrie," Sciences Po publications info:hdl:2441/53r60a8s3ku, Sciences Po.
  3. repec:mtp:titles:026201761x-01 is not listed on IDEAS
  4. Blanchard, Olivier, 2012. "Monetary Policy in the Wake of the Crisis," MIT Press Book Chapters, in: In the Wake of the Crisis: Leading Economists Reassess Economic Policy, edition 1, volume 1, chapter 1, pages 7-13 The MIT Press.
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