Median Voter Preferences, Central Bank Independence and Conservatism
This paper studies how the independence and conservatism of a central bank relate to the structure and stability of the median voter preferences. This is done by means of a model of endogenous delegation in which an opportunistic policy-maker chooses the monetary regime (independence and conservatism) to maximise the welfare of the median voter. The results show that a high degree of inflation aversion of monetary policy is not necessarily associated with a high degree of central bank independence. A high degree of inflation aversion of society (i.e. of the median voter) may lead to establish a central bank which is highly inflation averse, without necessarily making it independent. This suggests that the negative correlation between inflation and central bank independence indices detected by several empirical studies may reflect a link between inflation and some deep features of social preferences.
|Date of creation:||Apr 1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.bancaditalia.it
More information through EDIRC
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.:
- Pietro Reichlin & Paolo Siconolfi, 1998.
"Adverse Selection of Investment Projects and the Business Cycle,"
Temi di discussione (Economic working papers)
326, Bank of Italy, Economic Research and International Relations Area.
- Reichlin, Pietro & Siconolfi, Paolo, 1997. "Adverse Selection of Investment Projects and the Business Cycle," CEPR Discussion Papers 1631, C.E.P.R. Discussion Papers.
- Reichlin, P. & Siconolfi, P., 1998. "Adverse Selection of Investment Projects and the Business Cycle," Papers 326, Banca Italia - Servizio di Studi.
- Robert J. Shiller, 1997.
"Why Do People Dislike Inflation?,"
in: Reducing Inflation: Motivation and Strategy, pages 13-70
National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:bdi:wptemi:td_351_99. 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: ()
If references are entirely missing, you can add them using this form.