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The Political Economy of Central Banking: Historical Perspectives

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  • Stefano Ugolini

    (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - UT2J - Université Toulouse - Jean Jaurès - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville)

Abstract

The question of the relationship between monetary and fiscal authorities seems to be more complex than the recent debate on central bank independence would suggest. In the simple framework inspired by Sargent and Wallace (1976), the recipe for establishing an untarnished confidence in central bank money consisted in severing all links between governments and central bankers. In reality, however, monetary and fiscal authorities can hardly be separated at all: in fact, they are the two sides of the same coin – which is, the modern state. The idea that monetary and fiscal authorities can live their lives oblivious of each other does not seem to be validated by historical evidence.

Suggested Citation

  • Stefano Ugolini, 2013. "The Political Economy of Central Banking: Historical Perspectives," Post-Print hal-01294446, HAL.
    • Handle: RePEc:hal:journl:hal-01294446
    Note: View the original document on HAL open archive server: https://univ-tlse2.hal.science/hal-01294446v1
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    References listed on IDEAS

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    1. Sargent, Thomas J. & Wallace, Neil, 1976. "Rational expectations and the theory of economic policy," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 169-183, April.
    2. Timberlake, Richard H., 1993. "Monetary Policy in the United States," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226803845, August.
    3. Charles Goodhart, 1988. "The Evolution of Central Banks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570734, December.
    4. Stefano Ugolini, 2011. "What do we really know about the long-term evolution of central banking? Evidence from the past, insights for the present," Working Paper 2011/15, Norges Bank.
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