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Who Wants an Independent Central Bank? Monetary Policy‐making and Politics
Author(s) -
Ozkan F. Gulcin
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00218
Subject(s) - economics , politics , monetary policy , central bank , welfare , ideology , point (geometry) , monetary economics , fiscal policy , macroeconomics , market economy , political science , law , geometry , mathematics
The costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business‐cycles model. It is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy‐making. More specifically, right‐wing parties favour independent central banks more than left‐wing parties. An independent central bank is also the generally preferred option from a social welfare point of view. In addition, the form of policy‐making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles. JEL classification : E 32; E 58; E 63; C 72