Selected Issues Concerning Monetary Policy and Institutional Design for Central Banks: A Review of Theories

August 1, 2000

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In the past decades, much work has been geared toward solving the problem of time inconsistency in monetary policy and analyzing the coordination problem between fiscal and monetary policy. This paper provides a review of the theoretical background to these theories, while also focusing on their inherent problems. It concludes that while the literature makes a strong case for central bank independence, more work should be done in the area of determining the desirable degree of independence with a view to the interplay between fiscal and monetary policy.

Subject: Banking, Expenditure, Fiscal policy, Inflation, Inflation targeting, Monetary policy, Prices, Public debt

Keywords: budget constraint, commitment regime, coordination, debt ratio, Europe, incentive problem, Inflation, inflation rate, Inflation targeting, loss function, monetary policy, private sector, public finance, public spending, time inconsistency, WP

Pages:
48
Volume:
2000
DOI:
https://doi.org/10.5089/9781451856118.001
Issue:
140
Series:
Working Paper No. 2000/140
Stock No:
WPIEA1402000
ISBN:
9781451856118
ISSN:
1018-5941

IMF’s Work

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

Loading component...

IMF Working Papers