This paper surveys the recent literature on the theory of macroeconomic policy. We study the effect of various … incentive constraints on the policy making process, such as lack of credibility, political opportunism, political ideology, and …: it covers credibility issues, political business cycles, and optimal design of monetary institutions. Part II deals with …

This paper surveys the recent literature on the theory of macroeconomic policy. We study the effect of various … incentive constraints on the policy making process, such as lack of credibility, political opportunism, political ideology, and … and focuses on credibility, political business cycles, and optimal design of monetary institutions. Part II deals with …