The recent debate over monetary policy strategies concludes that monetary targeting in practice lead to very similar patterns of central bank behaviour. This raises the question why central banks insist on the strategies they use. In this paper, we develop an answer from political economy. After...

A political constitution is like an incomplete contract : it spells out a procedure for making decisions and for delegating power, without specifying the contents of those decisions. This creates a problem : the appointed policy maker could use this power for his own benefit against the...