The case for central bank independence is built on an intellectual two-step. Step one argues there is a problem of inflation prone government. Step two argues independence is the solution to that problem. This paper challenges that case and shows it is based on false politics and economics. The...

This paper investigates the determinants of countries' choice of monetary policy frameworks (MPF) for emerging and developing countries. Countries make different MPF choices and we think it is because they have different country-level characteristics (e.g. democratic strength and trade...

A two-country general equilibrium model with large wage setters and conservative monetary authorities is employed to investigate the welfare implications of three international monetary regimes: i) non-cooperative, ii) cooperative, and iii) monetary union. The analysis shows that the unions'...

The paper studies the dynamic nature of optimal solutions under commitment in Barro-Gordon and new-Keynesian models and, finds two interesting parameters - the implied targets and the persistence parameter that governs the adjustment toward the implied targets. The implied targets generally...

Despite a recent surge in the academic literature on central bank independence (CBI), little is known about its drivers in authoritarian states. Our theoretical argument starts from the simple idea that no country is an island. Whereas autocratic regimes possessing abundant resource wealth have...

We create a new measure of the political pressure faced by the Federal Reserve based on the analysis of transcripts of the Chairs' testimonies to Congress. We find that the use of non-traditional policies at low interest rates led to increased political criticism. We develop a model where the...

Thanks to the Maastricht Treaty and similar arrangements, central banks nowadays enjoy considerable independence. This is generally believed to be the result of relatively recent debates, which led to the conclusion that sheltering monetary authorities from the pressures of fiscal policymakers...

Can introducing Central Bank Digital Currency (CBDC) improve social welfare? We construct a dual currency model to study whether introducing CBDC with a recordkeeping technology can reduce tax evasion incentives in cash transactions, and further achieve a better allocation than in a cash-only...

Central bank independence is a multifaceted institutional design. The financial component has been seldom analysed. This paper intends to set a comprehensive conceptual background for central bank financial independence. Quite often central banks are modelled as robot-like maximizers of some...

In 2002 in reviewing the role of the Federal Reserve System (FED) the United States General Accounting Office declared that "We found no widely accepted, analytically based criteria to show whether a central bank needs capital as a cushion against losses or how the level of such an account...