A literature has grown up around papers by Kydland and Prescott (1977) and Barro and Gordon (1983) which shows how governments have an incentive to inflate the economy (to generate extra output) then the private sector will anticipate this and the economy will stick at a high inflation...

This paper does two things. First it looks at some simple models of monetary decision-making in a monetary union and asks how much more variable a country's output and inflation is likely to be if it joins the union. The question is asnwered analytically, and the simple model is then calibrated....

There is a considerable academic literature on the relationship between Central Bank independence and inflation but the issue of Central Bank accountability and its effect of inflation performance has received very little attention. This paper looks at the issue of accountability in a simple...