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dc.contributor.authorMueller, Tillen_US
dc.description.abstractFrom a normative perspective, it is striking that the degree of central bank independence (CBI) varies considerably across countries. Taking a political economy perspective, this paper demonstrates how different degrees of CBI may be the result of strategic policy-making. While an independent central bank reduces the incumbent politician's chances to influence current monetary policy it also raises the costs of future policy changes for political successors. Hence, when deciding on the degree of CBI, incumbent politicians face a trade-off: current influence on monetary policy versus policy durability. This paper shows how various factors change this trade-off and hence the institutional choice. The model predicts that the level of CBI incumbent politicians choose will increase in politicians' ability to screen central bankers' preferences, in the degree of political polarization, and in the weight politicians place on future policy outcomes. In contrast, the likelihood for the implementation of an independent central bank decreases in the re-election prospects of incumbents and in the utility central bankers receive from holding office.en_US
dc.publisherFreie Univ., Fachbereich Wirtschaftswiss. Berlinen_US
dc.relation.ispartofseriesDiskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2008/19en_US
dc.subject.keywordCentral bank independenceen_US
dc.subject.keywordpolitical economyen_US
dc.subject.stwPublic Choiceen_US
dc.titlePolitical determinants of central bank independenceen_US
dc.typeWorking Paperen_US
Appears in Collections:Diskussionsbeiträge, FB Wirtschaftswissenschaft, FU Berlin

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