Determinants of inflationary performance: Corporatist structures vs. central bank autonomy

Thanks go to John Aldrich, Robert Bates, William Bernhard, Richard Burdekin, Henry Chappel, Dudley Wallace and Thomas Willett for suggestions and to Ted Smith for computational assistance.     

Central bank independence and inflation: Corporatism,partisanship, and alternative indices of central bank independence

A well-developed theoretical literature suggests that central bank independence causes low inflation. Empirical work supporting this hypothesis is unsatisfactory, however, for two reasons: statistical analysis has only recently begun to include control variables, and important political variables that are related to inflation have not yet been included; analysis has not yet undertaken a systematic comparison of alternative indices of central bank independence. This paper addresses both weaknesses by testing the explanatory power of eight indices of central bank independence in a political-economic model of inflation. The results suggest that while support for the central bank independence hypothesis survives a relatively inclusive set of control variables, support for the hypothesis is not independent of the particular index upon which analysis relies.     

The limits of central bank independence for inflation performance

Public Choice - The independence of the central bank is routinely regarded as sacrosanct, at least for governments wishing to maintain credible monetary policy to meet inflation objectives. Yet...     

Reconsidering the principal components of central bank independence: The more the merrier?

We use principal component analysis to reassess the link between different attributes of central bank independence and inflation performance. We suggest that coding problems may account for the fact that almost none of the attributes included in the Cukierman index has a systematic, plausible relationship with inflation. The multi-faceted Cukierman index also seems to be out-performed by a much narrower index focusing solely on policy independence. These findings point to the importance of using public choice analysis to isolate the real problem here: namely, finding specific central bank structures that effectively insulate central bankers from political pressures.     

Democratic accountability and central bank independence: A response to Elgie

Empirical evidence is presented on the development of (violent) political conflict in 19 West European countries during the 1970s, the early 1980s and the entire post‐Second World War period. It is possible to identify three types of nation‐groups: ‘noisy‐participatory’ states such as the United Kingdom, France, Italy, and more recently Spain and Portugal ‐ and Greece if taken on a per capita base. The group of rather ‘quiet’ democracies consists of the Scandinavian countries, Switzerland and Luxembourg, with the remaining countries forming the middle, less clearly delineated group. There are two dimensions of political conflict: collective protest, made up of variables such as protest demonstrations, political strikes and riots, and internal war, characterised by the breakdown of the slate monopoly of violence and the organised use of violence by anti‐system groups. A causal model of political protest is presented and confronted with rival explanations. Empirical evidence and theoretical arguments lead to scepticism about accurate predictions of political violence and political instability.     

Stable money and central bank independence: implementing monetary institutions in postwar Germany

Germany prides itself in having one of the most successful central banks and national currencies with respect to independence and stability. I show that not only were both imposed on the country after 1945, but that German experts and officials resisted both initially. It thus represents a rare case of the successful imposition of institutions from abroad. Events are discussed in light of Peter Bernholz’s requirements of stable money and an independent central bank.

     

Capital mobility,perspectives and central bank independence: Exchange rate policy since 1945

Hegemonic stability theory has been the traditional explanation in International Political Economy for the trend from fixed to floating exchange rates which was brought about by the collapse of Bretton Woods. This approach is found to be problematic. A more powerful explanation is the postwar rise in capital mobility, which produces a trade-off between exchange rate stability and policy autonomy. Preferences for these two policies have been a function of perspectives on economic policy and the degree of central bank independence. Independent central banks prefer domestic policy autonomy to exchange rate management, as they have no socio-political incentives to produce competitive, stable exchange rates. Their interests are predominantly in achieving low domestic inflation. In addition, current perspectives hold that the best way of securing international exchange rate stability is to pursue stable macroeconomic policies at home, resulting in the predominance of floating exchange rate policies. This trend will continue into the near future despite opportunities for international cooperation presented by the rationalization of world monetary politics into a G3 following the introduction of the euro. This may have adverse effects on the global economy for three reasons. First, there is a long-term danger that triad regionalization will result in a revival of neo-mercantilist policies, in which the exchange rate could play a part. Second, a high proportion of world trade and finance will be denominated in dollars and euros, rendering the stability of the dollar/euro exchange rate a global public good. Third, dollar/euro exchange rate misalignments which harm either the U.S. or EMU will be harmful to the global economy because of the high percentage of world GDP accounted for by these two areas.     

Democratic accountability and central bank independence: Historical and contemporary,national and European perspectives

Recently there has been a general move towards greater central bank independence in Europe. Countries such as Belgium, Britain, France and Spain have all increased the autonomy of their respective central banks. In this context, some people have argued that the prospects for democratic, representative government have been weakened. In these countries, democratically elected governments can no longer control the process of monetary policy making. By constructing an index of central banks’ independence, this article shows that the recent moves towards central bank independence in Britain and France have not challenged the basic foundations of indirect political accountability. However, it also shows that the proposed institutional architecture of the European Central Bank is a departure from the norms of political accountability and that, in this case, there is a distinct ‘democratic deficit’ which needs to be addressed.     

Party politics and the survival of central bank governors

Legally independent central banks leave elected politicians with little direct control over monetary policy. The most important indirect channel of influence for governments thus consists in appointing ‘responsive’ central bank officials and removing ‘hostile’ ones. This premise is tested by examining the effect of partisan ties between central bank governors and governments or presidents in 30 European democracies between 1945 and 2012. Drawing on an original dataset containing information on the party affiliations of 195 governors, event history models are employed to show that affiliation with a party represented in the executive (the government or the presidency) has a large and significant positive effect on governor survival. However, affiliation with an opposition party only increases governors' hazards during the first four years of their term, suggesting that the impact of the party label may be overridden as more reliable information about a governor becomes available.     

The issue of instability in a simple policy game between the central bank and a representative union

In the recent economic literature the independence of the central bank is often considered to be one of the most effective guarantees to achieve price stability. A strong theoretical basis for this proposition is that the monetary policy delegation given to an independent central bank is an optimal instrument to avoid the time inconsistency problem of monetary policy. This paper investigates the stability properties of this solution in a simple game in which the private sector (i.e. the trade unions) and the public sector (i.e. the central bank) simultaneously interact. A representative monopoly union is considered, and – in line with the recent economic debate – two types of unions are investigated: (i) the standard micro-founded trade union; (ii) the inflation-averse trade union. In both cases, we find that the requirement for the Nash equilibrium to be stable imposes a limit to the conservativeness of the central bank. Instability of the Nash equilibrium reveals a strategic co-ordination failure between the public and the private sector.     

Dispersed communication by central bank committees and the predictability of monetary policy decisions

The paper asks whether members of central bank decision-making committees should communicate with the public in a collegial manner, by conveying the consensus or majority view of the committee, or in an individualistic way, by providing the diversity of views among the committee members. It finds that more active as well as more consistent communication by committee members improves the predictability of monetary policy decisions significantly. This effect is sizeable as communication dispersion across committee members accounts on average for one third to one half of the market’s prediction errors of FOMC policy decisions. Moreover, more active and more consistent communication are found to also reduce the degree of uncertainty about the future path of interest rates. These findings suggest that a collegial communication which stresses the consensus view on policy inclinations can enhance the effectiveness of central bank communication.     

Institutions and the convergence hypothesis: The cross-national evidence

DeLong and others have shown that cross-country convergence in per capita incomes is limited to samples of currently-industrialized nations, or universal-literacy nations. In particular, income dispersion has failed to decline in groups of ex ante rich nations. This study finds strong convergence in per capita incomes among nations with institutions (namely secure property rights) conducive to saving, investing, and producing. Incomes are shown to converge even within ex ante rich samples when measures of institutional quality are held constant.     

The ruthless Fed: A critique of the AST hypothesis

This paper examines the hypothesis that the Great Contraction was the result of rational rent-seeking by members of the Federal Reserve System. In contrast to the AST hypothesis, evidence on the share prices of member banks that survived the contraction suggests that the owners of these banks suffered an absolute decline in real wealth and a decline relative to a broad spectrum of other investment alternatives. Furthermore, monetary surprises had no statistically discernible effect on the share prices of these banks. This evidence conflicts with the notion that rational rent-seeking would lead the owners of member banks and their bureaucratic conspirators in the Federal Reserve System to unleash a policy with the goal of contracting the money supply by 35 percent.     

Targeting the lobbying effort: The importance of local government lobbying

Local government is subject to extensive lobbying, which is reasonable given the greater importance of the local public sector in large welfare states. Most of the scholarly attention has been focused on lobbying at the national level, often addressing the impact of interest groups on public policies. This article discusses a decision–making model where interest groups optimize their lobbying efforts given the way that different local governments and individual politicians respond to these activities. A number of propositions are tested on the basis of data from Norwegian local government. Contrary to prior theorizing, we do not find that representatives seeking re–election are contacted more frequently by interest groups. Interest groups target their lobbying activities toward politicians who are members of the relevant council committees, and they exert stronger pressure on members of the executive board and active representatives who perceive themselves as influential. Inter–municipal differences are also of importance: The lobbying activities are more intensive where electoral participation is low and in the larger urban municipalities, while the size of legislatures and the strength of the local political leadership affect lobbying efforts negatively. Interest groups tend to be more active in the richer local governments. The demands of the residential population impact weakly on lobbying efforts.     

大学英语个性化教学与自主性学习相融合的改革与实践

以吉林师范大学大学英语教学改革为例,针对吉林师范大学目前大学英语教学中存在的问题,分析了旨在尊重学生个体差异和学习者学习自主性的前提下开展英语个性化教学的理论依据,并提出了开展个性化英语教学的途径,从而培养更多的富有个性化的创新型外语人才。     

Targeting the lobbying effort: The importance of local government lobbying

Abstract Local government is subject to extensive lobbying, which is reasonable given the greater importance of the local public sector in large welfare states. Most of the scholarly attention has been focused on lobbying at the national level, often addressing the impact of interest groups on public policies. This article discusses a decision–making model where interest groups optimize their lobbying efforts given the way that different local governments and individual politicians respond to these activities. A number of propositions are tested on the basis of data from Norwegian local government. Contrary to prior theorizing, we do not find that representatives seeking re–election are contacted more frequently by interest groups. Interest groups target their lobbying activities toward politicians who are members of the relevant council committees, and they exert stronger pressure on members of the executive board and active representatives who perceive themselves as influential. Inter–municipal differences are also of importance: The lobbying activities are more intensive where electoral participation is low and in the larger urban municipalities, while the size of legislatures and the strength of the local political leadership affect lobbying efforts negatively. Interest groups tend to be more active in the richer local governments. The demands of the residential population impact weakly on lobbying efforts.