In these notes we address the question of Central Bank Independence (hereafter CBI). We use a principal-agent model of the institutional regime. Citizens are the principals who demand CBI and the incumbent government is the agent which establishes the central bank regime, supplying it

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'...

We consider the optimality of various institutional arrangements for agencies that conduct macro-prudential regulation and monetary policy. When a central bank is in charge of price and financial stability, a new time inconsistency problem may arise. Ex-ante, the central bank chooses the...

This paper shows that multiple steady states occur if a central bank is not independent and is compelled to finance a large fiscal deficit through seigniorage. If the initial capital stock is less than a certain threshold, the economy converges to a steady state where the capital stock is low...

Central bank independence and governance (CBIG) is a term subject to conflicting definitions and modelling and so its related studies are difficult to compare. This paper therefore focuses on developing of a workable definition, and a robust CBIG index model by identifying its key determinants....