We propose a theory to explain why, and under what circumstances, a politician gives up rent and delegates policy tasks … to an independent agency. We apply this theory to monetary policy by extending a standard dynamic ""New …-Keynesian"" stochastic general equilibrium model. This model gives a new theory of central bank independence that is unrelated to the …

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 … application of our framework suggests a new theory of central bank independence. …