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Monetary policy and central bank behaviour

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  • Manfred Gärtner

Abstract

This paper surveys the state of the art on monetary policy and central bank behaviour from a public choice perspective. After a brief look at the roots of today’s view of monetary policy conduct and institutional design in early work on political business cycles, the inflation-stabilisation dilemma is discussed along with proposed solutions in the form of central bank independence and conservativeness, incentive contracts, and inflation targets. The final section turns to current developments, including the proper choice of policy targets, the role of New Keynesian aggregate-supply curves and the quest for monetary policy rules triggered by the Taylor rule.

Suggested Citation

  • Manfred Gärtner, 2002. "Monetary policy and central bank behaviour," University of St. Gallen Department of Economics working paper series 2002 2002-24, Department of Economics, University of St. Gallen.
    • Handle: RePEc:usg:dp2002:2002-24
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    References listed on IDEAS

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    More about this item

    Keywords

    Monetary policy; Central banking; Public choice;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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