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Games for Central Bankers: Markets v/s Politics in Public Policy Decisions


  • Alessandra Casella


This paper questions the link between the establishment of a common currency among several countries and the necessity of political coordination. It begins by discussing why conducting a single monetary policy is thought to be easier within a single political unit. It then proceeds to enquire whether market mechanisms could be used to choose optimally the common policy of heterogenous actors, and thus provide an alternative to political decision-making. The advantage of market mechanisms is that they are transparent, predictable, and usually more efficient. In particular, the paper studies a simple game through which national representatives could choose the monetary policy of a single, multinational central bank. There are no fundamental logical objections or impossible practical obstacles to such market games, and even if they are rejected in principle they are useful in suggesting desirable amendments to traditional voting schemes.

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  • Alessandra Casella, 2000. "Games for Central Bankers: Markets v/s Politics in Public Policy Decisions," NBER Working Papers 8026, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8026
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    References listed on IDEAS

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    Cited by:

    1. Lossani, Marco & Natale, Piergiovanna & Tirelli, Patrizio, 2001. "A Reform Proposal for EMU Institutions," MPRA Paper 18694, University Library of Munich, Germany.
    2. Ansgar Belke & Dirk Kruwinnus, 2003. "Erweiterung der EU und Reform des EZB-Rats: Rotation versus Delegation," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 218/2003, Department of Economics, University of Hohenheim, Germany.

    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods


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