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The trade off between central bank independence and conservativeness

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  • Eijffinger, S.C.W.

    (Tilburg University, School of Economics and Management)

  • Hoeberichts, M.M.

    (Tilburg University, School of Economics and Management)

Abstract

This paper introduces a parameter for central bank independence in a monetary policy game with a conservative central banker. It tries to explain the optimal degree of central bank independence and conservativeness by four economic and political determinants, both theoretically and empirically. There appears to be a trade-off between central bank independence and conservativeness. Then, by comparing the optimal degree of conservativeness and independence with the actual degree of independence, the authors want to identify the optimal degree of conservativeness for twelve member states of the European Union. Copyright 1998 by Royal Economic Society.
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Suggested Citation

  • Eijffinger, S.C.W. & Hoeberichts, M.M., 1998. "The trade off between central bank independence and conservativeness," Other publications TiSEM edcd13f6-471a-415a-b14e-5, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:edcd13f6-471a-415a-b14e-5ccf48c5c4e7
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    References listed on IDEAS

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    1. Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, vol. 82(1), pages 273-286, March.
    2. Eijffinger, S.C.W., 1993. "Central bank independence in twelve industrial countries," Other publications TiSEM 0401b17a-e2c7-4179-ace9-a, Tilburg University, School of Economics and Management.
    3. Eijffinger, S.C.W. & Schaling, E., 1993. "Central bank independence : Theory and evidence (Revised version)," Discussion Paper 1993-25, Tilburg University, Center for Economic Research.
    4. Eijffinger, S.C.W. & Schaling, E., 1992. "Central bank independence : Criteria and indices," Research Memorandum FEW 548, Tilburg University, School of Economics and Management.
    5. Eijffinger, S.C.W. & de Haan, J., 1995. "The political economy of central bank independence (Second, revised version)," Discussion Paper 1995-87, Tilburg University, Center for Economic Research.
    6. Manfred Neumann, 1991. "Precommitment by central bank independence," Open Economies Review, Springer, vol. 2(2), pages 95-112, June.
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    10. Cukierman Alex, 1992. "CENTRAL BANK STRATEGY, CREDIBILITY, AND INDEPENDANCE: THEORY AND EVIDENCE: Compte Rendu par Dominique Cariofillo," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 581-590, December.
    11. Eijffinger, S.C.W. & Hoeberichts, M.M. & Schaling, E., 1995. "Optimal conservativeness in the Rogoff (1985) model : A graphical and closed-form solution," Discussion Paper 1995-121, Tilburg University, Center for Economic Research.
    12. de Haan, Jakob & van 't Hag, Gert Jan, 1995. "Variation in Central Bank Independence across Countries: Some Provisional Empirical Evidence," Public Choice, Springer, vol. 85(3-4), pages 335-351, December.
    13. Eijffinger, S. & De Hann, J., 1995. "The Political Economy of Central Bank Independence," Papers 9587, Tilburg - Center for Economic Research.
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