This paper presents an interest group theory of central bank independence. The theory is grounded in the concept of … unanticipated burst of inflation that unravels many interest group deals. The interest groups then have to return to the politicians …, while politicians can benefit from creating unanticipated inflation, they benefit even more by credibly precommiting not to …

independent central bank in place, politicians have an incentive to create unexpected bursts of inflation that disrupt interest … group deals previously negotiated. In the face of such inflation, the interest groups have to return to the politicians to …. However, politicians, ex ante, would prefer not to face the temptation to extract rents through inflation. The reason is that …

being a function of rent seeking and/or lobbying by de facto power holders is tested. The resulting interesting finding is … that, political interference, rent seeking and lobbying increase the probability of state fragility by mitigating the …

this event, firms with little or no prior exposure to the federal accounts that experienced cuts reduced their lobbying … spending. In contrast, firms with a high degree of exposure to the cuts maintained and even increased their lobbying spending … likely intensified their lobbying efforts to distinguish themselves from the others and improve their chances of procuring a …