60 Pages Posted: 24 Mar 2010 Last revised: 4 Jun 2010
Date Written: May 2010
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 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: 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