search query: @indexterm CENTRAL BANK INDEPENDENCE / total: 3
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| Author: | Gabillon, E. Martimort, D. |
| Title: | The benefits of central bank's political independence |
| Journal: | European Economic Review
2004 : APR, VOL. 48:2, p. 353-378 |
| Index terms: | Monetary policy Central bank independence Models |
| Language: | eng |
| Abstract: | This article presents a two-tier model of monetary policy and discusses the benefits of political independence of a central banker (hereafter as: CB). The CB is seen as both subject to the explicit influence of elected political principals and to the implicit influence of interest groups wanting to capture monetary policy. The results show that even though the agency costs are increased, an independent CB helps to stabilize the politically induced fluctuations of inflation and thus ex ante social welfare increases. |
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