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Independent Central Banks: Low Inflation at No Cost? A Model with Fiscal Policy

Montserrat Ferré & Carolina Manzano

International Journal of Central Banking2020article
AJG 3ABDC A
Weight
0.38

Abstract

In this article we extend the rational partisan model of Alesina and Gatti (1995) to include a second policy, fiscal policy, besides monetary policy. It is shown that the extent to which an independent central bank is successful in attaining price stability depends on the degree of conservativeness of the central bank in relation to the political parties and the private sector's expectations on which party will win the elections. In addition, the inclusion of fiscal policy in Alesina and Gatti's model implies that uncertainty about the course of policy is not a sufficient factor to ensure that, when supply shocks are not relevant, independent central banks bring about low inflation at no real cost.

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Cite this paper

@article{montserrat2020,
  title        = {{Independent Central Banks: Low Inflation at No Cost? A Model with Fiscal Policy}},
  author       = {Montserrat Ferré & Carolina Manzano},
  journal      = {International Journal of Central Banking},
  year         = {2020},
}

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Independent Central Banks: Low Inflation at No Cost? A Model with Fiscal Policy

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Evidence weight

0.38

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.09 × 0.4 = 0.04
M · momentum0.80 × 0.15 = 0.12
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.