Positive Political Economy: Theory and Evidence

by Edited by Sylvester C. W. Eijffinger , Harry P. Huizinga

• ISBN13: 9780521572156
• ISBN10: 0521572150
• Format: Hardcover
• Copyright: 1998-06-13
• Publisher: Cambridge University Press

Summary

This book investigates how observed differences in institutions affect political and economic outcomes in various social, economic, and political systems. It also examines how the institutions themselves change and develop in response to individual and collective beliefs, preferences, and strategies. This volume tackles both monetary and real topics in an integrated way, and represents the first coherent empirical investigation of positive models of political economy. The various contributions discuss issues of great topicality not just for Europe, but for all developed economies: why do central banks matter? What determines their independence? How do central bank independence and exchange rate regimes affect monetary integration and activism? The volume also discusses the costs of a monetary union, unemployment benefits, and redistributive taxation.

Table of Contents

List of figures	ix	(1)
List of tables	x	(3)
List of contributors	xiii	(2)
Foreword	xv
Arie Kapteyn
Introduction	1	(8)
Sylvester Eijffinger
Harry Huizinga
I Monetary institutions and policy	9	(178)
1 Reputational versus institutional solutions to the time-consistency problem in monetary policy	9	(20)
Susanne Lohmann
Comment Manfred J.M. Neumann
2 Reciprocity and political business cycles in federal monetary unions	29	(18)
Jurgen von Hagen
Comment Kees Koedijk
3 The ultimate determinants of central bank independence	47	(31)
Sylvester Eijffinger
Eric Schaling
Comment Lex Hoogduin
4 Central bank autonomy and exchange rate regimes -- their effects on monetary accommodation and activism	78	(42)
Alex Cukierman
Pedro Rodriguez
Steven B. Webb
Comment Jakob de Haan
5 Uncertainty, instrument choice, and the uniqueness of Nash equilibrium: microeconomic and macroeconomic examples	120	(42)
Dale W. Henderson
Ning S. Zhu
Comment Harald Uhlig
6 New empirical evidence on the costs of European Monetary Union	162	(25)
Helene Erkel-Rousse
Jacques Melitz
Comment Daniel Gros
II Exchange rate policy and redistribution	187	(107)
7 Exchange rate anchors and inflation: a political economy approach	187	(30)
Sebastian Edwards
Comment Casper de Vries
8 Why capital controls? Theory and evidence	217	(36)
Gian Maria Milesi-Ferretti
Comment Lans Bovenberg
9 The political economy of the Exchange Rate Mechanism	253	(16)
Patrick Minford
Comment Jacques Sijben
10 Unemployment benefits and redistributive taxation in the presence of labor quality externalities	269	(25)
Harry Huizinga
Comment Casper van Ewijk
Index	294