IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

An Interest-Group Theory of Central Bank Independence

Listed author(s):
  • Miller, Geoffrey P
Registered author(s):

    This article presents an interest-group theory of central bank independence. In the absence of an independent central bank, politicians can benefit in the short run by creating an unanticipated burst of inflation that unravels many interest-group deals. Interest groups then have to return to the politicians to renegotiate the deals, and the politician can extract a portion of the rents as a price for renegotiation. However, while politicians can benefit from creating unanticipated inflation, they benefit even more by credibly precommitting not to inflate the currency ex post. If they do not inflate the currency ex post, they can obtain more in payments for their services ex ante because the interest groups that are paying for the deal will not discount their upfront compensation by the risk that the deal will lack durability owing to future inflation. The independent central bank provides a mechanism for reliably precommitting not to engage in inflationary actions designed to extract future rents. Copyright 1998 by the University of Chicago.

    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.

    File URL:
    Download Restriction: Access to the online full text or PDF requires a subscription.

    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.

    Article provided by University of Chicago Press in its journal Journal of Legal Studies.

    Volume (Year): 27 (1998)
    Issue (Month): 2 (June)
    Pages: 433-453

    in new window

    Handle: RePEc:ucp:jlstud:v:27:y:1998:i:2:p:433-53
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:27:y:1998:i:2:p:433-53. 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: (Journals Division)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.