Economic Policy and Performance in Industrial Democracies: Party Governments, Central Banks and the Fiscal-Monetary Policy Mix

by Sakamoto; Takayuki

• ISBN13: 9780415774147
• ISBN10: 0415774144
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-03-07
• Publisher: Routledge

Summary

This book is the first systematic study of how the interdependence of fiscal and monetary policies and the interaction of party governments and central banks affect the fiscal-policy mix in eighteen industrial democracies in North America, Western Europe, Japan and Oceania. Sakamoto argues that central banks' influence on economic policy is far more extensive than has been conventionally believed. He demonstrates that central banks systematically affect fiscal policy that is conducted by party governments, and that independent central banks restrain the latter's fiscal policy. Sakamoto also demonstrates that the economic policy of industrial democracies did really change from the 1960s-1970s to the 1980s-1990s and became conservative as a result of the globalization of the economy and governments' response to it. But he argues that despite the neo-liberal policy shift, globalization has not diminished the role of domestic politics in economic policy.

Table of Contents

List of figures
List of tables
Introduction	p. 1
Industrial democracies, globalization, challenges, and policy response: the setting	p. 3
The interdependence of fiscal and monetary policies and the interaction of party governments and central banks	p. 6
Change across time	p. 8
Different properties of policy instruments	p. 9
Plan of the book	p. 10
Party governments-central banks interaction: the fiscal-monetary policy mix	p. 12
The fiscal-monetary policy mix	p. 14
Central banks and party governments: fiscal-monetary policy interaction	p. 16
Different incentive and capacity of partisan governments, and their interaction with central banks	p. 30
Electoral cycles, central banks, and policy attributes	p. 41
Change in the economic environment, political actors, and adjustment	p. 53
The new economic environment, policy adjustments, and adaptation	p. 55
Weak-performing governments and institutions?: myth	p. 65
Sum	p. 81
Appendix	p. 84
The political-economic determinants of economic policy and outcomes: basic empirical results	p. 88
Data, variables, and methods	p. 89
Spending policy	p. 101
Tax policy	p. 124
Total spending and tax revenues	p. 138
Budget balance and monetary policy stance	p. 145
Economic performance	p. 155
Summary and conclusion	p. 167
Appendix: cyclically adjusted measures of discretionary fiscal and monetary policies	p. 174
Party governments, central banks, and labor: empirical evidence for interactive effects	p. 176
Coalition governments and central banks	p. 179
Center governments and central banks	p. 198
Left governments and central banks	p. 215
Conservative governments and central banks	p. 231
Central bank independence and electoral cycles	p. 243
Coalition governments and electoral cycles	p. 248
Fragmented party systems and electoral cycles	p. 252
Left governments and coordinated labor: social democratic neocorporatist regimes	p. 261
Labor and central banks	p. 276
Conclusion	p. 287
Conclusion	p. 289
Trends in spending and tax policies and future prospects	p. 292
Issues we need to investigate	p. 303
Notes	p. 307
References	p. 320
Index	p. 327
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