Post by Sapphire Capital on Jul 11, 2008 21:36:23 GMT 4
Goal Independent Central Banks: Why Politicians Decide to Delegate
CHRISTOPHER CROWE
International Monetary Fund (IMF)
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March 2008
Paolo Baffi Centre Research Paper No. 2008-10
Abstract:
A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictions. The model also explains why the expected negative relationship between CBI and inflation is not empirically robust: endogenous selection biases the estimated effect towards zero. The data confirm this.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1113719_code962400.pdf?abstractid=1113719&mirid=3
CHRISTOPHER CROWE
International Monetary Fund (IMF)
--------------------------------------------------------------------------------
March 2008
Paolo Baffi Centre Research Paper No. 2008-10
Abstract:
A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictions. The model also explains why the expected negative relationship between CBI and inflation is not empirically robust: endogenous selection biases the estimated effect towards zero. The data confirm this.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1113719_code962400.pdf?abstractid=1113719&mirid=3