The main result of the paper is that policy reversals are more likely floowing realization of extreme and relatively unlikely values of parameters that map policy choice into outcomes. A corollary to this result is that policy reversals occur infrequently.

This paper surveys and evaluates alternative views regarding the desirable combination of accountability, credibility and trasnparency in the newly created ECB (European Central Bank), including recent controversies regarding publication of minutes, Council member votes and ECB forecasts.

This paper develops extensive new data on the legal independence of central banks in 26 former socialist economies (FSE). This data is constructed using the codification system for measuring legal independence developed in Cukierman, Webb and Neyapti (1992) and in chapter 19 of Cukierman (1992)....

The paradigm of a direct democracy in which individuals vote direclty on the issues is widely used in the recent political economy literature that explicitly models the interaction between economic and political behavior. Yet, in most existing democracies policy decisions are delegated to...

The Kydland-Prescott, Barro-Gordon inflation bias result relies on the presumption that policymakers aim at achieving a level of employment above the normal level. This presumption has been recently questioned by both academics and policymakers on the ground of realism. This note shows that even...

The recent quest for price stability with the relative success of the Bundesbank in maintaining low inflation induced a good number of countries in Europe and elswhere to reconsider the legal foundations of the institutions that formulate and implement monetary policy.

Since 1989 twenty five countries in different parts of the world have substantially upgraded the legal independence of their central bank's. This trend is particularly remarkable in view of the fact that during the preceding forty years changes in central bank (CB) legislation were relatively...