The limits of delegation : veto players, central bank independence, and the credibility of monetary policy

Stasavage, David and Keefer, Philip (2003) The limits of delegation : veto players, central bank independence, and the credibility of monetary policy. American Political Science Review, 97 (3). pp. 407-423. ISSN 1537-5943

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Abstract

Governments unable to make credible promises hinder economic development and effective policy making. Scholars have focused considerable attention on checks and balances and the delegation of authority to independent agencies as institutional solutions to this problem. The political conditions under which these institutions enhance credibility, rather than policy stability, are still unclear, however. We show that checks – multiple veto players – enhance credibility, depending on the extent of uncertainty about the location of the status quo, on how agenda control is allocated among the veto players, and on whether veto players have delegated policy making authority to independent agencies. In the context of monetary policy and independent central banks, we find evidence supporting the following predictions: delegation is more likely to enhance credibility and political replacements of central bank governors are less likely in the presence of multiple political veto players; this effect increases with the polarization of veto players.

Item Type:	Article
Official URL:	http://uk.cambridge.org/journals/journal_catalogue...
Additional Information:	Published 2003 © Cambridge University Press. LSE has developed LSE Research Online so that users may access research output of the School. Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (http://eprints.lse.ac.uk) of the LSE Research Online website.
Divisions:	LSE
Subjects:	J Political Science > JZ International relations
Date Deposited:	06 Jul 2006
Last Modified:	18 Nov 2024 22:48
URI:	http://eprints.lse.ac.uk/id/eprint/184

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