Economics, Econometrics and Finance
8 years ago

Political inertia hinders renegotiation, impacting monetary policy delegation in democracies.

Essays in monetary economics and applied econometrics
Paolo Giordani

Paper Summary

The article discusses how political institutions can make renegotiating monetary policy contracts costly, affecting the effectiveness of delegation. It shows that certain institutions in Western democracies can better handle dynamic inconsistencies, with the ECB being an example of credible delegation.

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