2015/01/17 by José Fernández-Albertos · 2 citations
Economics, Econometrics and Finance · #Global Financial Crisis and Policies #Banking stability, regulation, efficiency #Fiscal Policies and Political Economy
paper · pdf · doi:10.1146/annurev-polisci-071112-221121
openalex publication_date 2015/01/17 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/02
This article reviews recent contributions addressing the following questions: Under what circumstances is monetary policy delegated to politically independent central banks? What effects do these politically independent institutions have, and how do they interact with their macroeconomic institutional environment? What explains the variation in their behavior? And finally, to what extent has the recent economic crisis altered the role of these institutions? In answering these questions, this article advances two arguments. First, even though central banks' activities involve a great deal of technical knowledge, they are unavoidably political institutions: They make distributional choices informed by ideas, preferences, and the political context in which they operate. Second, the economic crisis, by expanding the type of activities that monetary authorities undertake, further contributes to the politicization of these institutions. The final section of the article speculates about the implications of these developments for economic policy making in contemporary democracies.