EGGERTSSON, GAUTI B.; BORGNE, ERIC LE - In: Journal of Money, Credit and Banking 42 (2010) 4, pp. 647-677
We propose a simple theory to explain why, and under what circumstances, a politician delegates policy tasks to a technocrat in an independent institution and then analyze under what conditions delegation is optimal for society. Our theory builds on Holmström's (1982, 1999)"hidden effort"...