Bashing and Coercion in Monetary Policy
Year: 1991
Type: article
Abstract: Political pressure, or “bashing,” by the administration is typically believed to be one way that the administration can coerce an otherwise independent central bank into following the administration's preferred monetary policy path. This paper develops a model for analyzing this type of policy “cooperation” and demonstrates that bashing the central bank creates uncertainty on the part of private agents with regard to future policy actions, which translates into real wage and output variability. Hence, although beneficial to the administration, political pressure creates uncertainty and thus economic instability.
Source: Economic Inquiry
Author: Christopher J. Waller
Institution: Indiana University Bloomington
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2014235757