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The Politics of Monetary Policy

60 Pages Posted: 24 Mar 2010 Last revised: 4 Jun 2010

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Andrea Stella

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: May 2010

Abstract

In this paper we critically review the literature on the political economy of monetary policy, with an eye on the questions raised by the recent Â…financial crisis. We begin with a discussion of rules versus discretion. We then examine the issue of Central Banks independence both in normal times, in times of crisis. Then we review the literature of electoral manipulation of policies. Finally we address international institutional issues concerning the feasibility, optimality and political sustainability of currency unions in which more than one country share the same currency. A brief review of the Euro experience concludes the paper.

Suggested Citation

Alesina, Alberto F. and Stella, Andrea, The Politics of Monetary Policy (May 2010). Harvard Institute of Economic Research Discussion Paper No. 2183. Available at SSRN: https://ssrn.com/abstract=1577167 or http://dx.doi.org/10.2139/ssrn.1577167

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-8388 (Phone)
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Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrea Stella

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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