Central Bank Strategy, Credibility, and Independence: Theory and EvidenceAlex Cukierman is well known for his work on central bank behavior. This book brings together a large body of Cukierman's research and integrates it with recent developments in the political economy of monetary policy. Filled with applications and carefully worked out technical detail, it provides a valuable comprehensive analysis of central bank decisions, of the various effects of policy on inflation, and of the feedback from inflationary expectations to policy choices. Cukierman uncovers and analyzes the reasons for positive inflation and rates of monetary expansion. He shows that the money supply, and therefore inflation, are not exogenous. They are influenced by interactions involving distributional considerations, private information, personal motives, and the political environment. This point of view makes it possible to identify the institutional, political, and other features of a country that may be conducive to inflationary environments. Cukierman presents new multidimensional evidence on both legal and actual central bank independence for a sample of up to 70 countries and uses it to investigate the interconnections between the distributions of inflation and of central bank independence. He takes up such issues as why some countries have more independent central banks than others and identifies reasons for the substantial cross country variation in seigniorage. He provides positive explanations for the tendency of central banks, like the US Federal Reserve, to smooth interest rates and to be secretive. Observing that it is likely that the European Economic Community will have a monetary union before the turn of the century, Cukierman applies the techniques of modern political economy to discuss the effect of this change on the commitment to price stability. The book includes simple and advanced materials as well as informal summaries of the major technical results. The introduction contains a modular guide for reading and teaching the material. |
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Contents
Introduction | 1 |
Overview of Part I | 15 |
The Revenue Motive for Monetary Expansion | 47 |
The Mercantilistic or BalanceofPayments Motive | 83 |
Comparison of Policy Outcomes under a System | 97 |
The Financial Stability Motive Interest Rate Smoothing | 117 |
Overview of Models of Monetary Policy with Private | 139 |
The Employment Motive in the Presence of a Minimal | 161 |
Partial Disclosure of Policy and Its Effect on Policy | 245 |
Why Does Inflation Persist?Theories of Monetary | 273 |
Signaling and Private Information about the Ability | 309 |
High Concern about Price Stability | 323 |
Aspects of Central Bank Independence and Their Impact | 349 |
The Measurement of Central Bank Independence | 369 |
Inflation and Central Bank Independence | 415 |
Ranking of Central Banks by an Overall Index | 433 |
Symmetric Information | 172 |
An Extended Information Advantage about Central Bank | 185 |
Determinants | 191 |
Alternative Notions of Credibility and Reputation | 205 |
Velocity Shocks Politics Signaling Inflation Persistence | 223 |
The Mean and the Variance of Inflation Central Bank | 439 |
Notes | 457 |
| 473 | |
Other editions - View all
Central Bank Strategy, Credibility, and Independence: Theory and Evidence Alex Cukierman No preview available - 2003 |
Common terms and phrases
ability actual addition announcements appears appendix authorities average bias CB independence central bank changes chapter coefficient commitment concern condition consequence contracts costs countries credibility decreasing demand depends determined discussed economy effect employment equation equilibrium expectations fact forecast framework function future given Hence higher identical implies important increase individuals inflationary interest Italy labor larger learning less limitations lower mean measures monetary expansion monetary policy motive natural negative nominal Note objectives observations obtain optimal partially particular past perfect information period persistence planned policymakers political positive possible precise preference presence price stability private information probability problem proposition range rate of inflation rate of monetary reason reduces relative respect response result seigniorage shocks structure surprises takes tion turnover uncertainty union variables various wage zero
Bibliographic information
| Title | Central Bank Strategy, Credibility, and Independence: Theory and Evidence Learning Development, and |
| Author | Alex Cukierman |
| Contributor | Massachusetts Institute of Technology (Cambridge, Mass.) |
| Edition | illustrated, reprint |
| Publisher | MIT Press, 1992 |
| ISBN | 0262031981, 9780262031981 |
| Length | 496 pages |
| Subjects | › Business & Economics / Econometrics Business & Economics / Inflation |
| Export Citation | BiBTeX EndNote RefMan |