The political economy of monetary policy conduct and central bank design
Series
Discussion Paper
Type
discussion paper
Date Issued
2006-10-25
Author(s)
Abstract
This paper provides a concise overview of the state of the art on monetary policy and central banking from a public choice perspective. It starts with a brief look at the roots of today's view of monetary policy conduct and the design of pertinent institutions in early work on political business cycles, and then proceeds to a discussion of the inflationstabilization dilemma along with proposed solutions in the form of central bank independence and conservativeness, incentive contracts, and inflation policy targets. The last section addresses current developments. These include the proper choice of monetary policy targets, the role of New Keynesian and sticky-information aggregate-supply curves and the quest for simple and efficient rules for monetary policy that has been triggered by the proposal and widespread polularity of the Taylor rule.
[http://www.vwa.unisg.ch/RePEc/usg/dp2006/DP25_Ga.pdf Volltext herunterladen]
[http://www.vwa.unisg.ch/RePEc/usg/dp2006/DP25_Ga.pdf Volltext herunterladen]
Language
English
Keywords
Monetary policy
central banking
rules
discretion
stabilization
inflation
bias
public choice
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Department of Economics
Publisher place
University of St. Gallen
Number
2006-25
Start page
34
Subject(s)
Division(s)
Eprints ID
31406