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Transparency, democratic accountability, and the economic consequences of monetary institutions

Stasavage, David (2003) Transparency, democratic accountability, and the economic consequences of monetary institutions. American Journal of Political Science, 47 (3). pp. 389-403. ISSN 0092-5853

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Identification Number: 10.1111/1540-5907.00028


Debates about the appropriate mix between autonomy and accountability of bureaucrats are relevant to numerous areas of government action. I examine whether there is evidence of a tradeoff between transparency, democratic accountability, and the gains from monetary delegation. I begin by presenting a simple theoretical model which suggests that central banks that are transparent, in the sense of publishing their macroeconomic forecasts, will find it easier to acquire a reputation. Despite making central banks more subject to outside scrutiny then, monetary transparency can lead to improved economic outcomes. I also consider arguments about the effect of accountability provisions involving parliamentary oversight and control over central bankers. The paper then uses a new data set to examine these issues empirically, focusing on a natural experiment involving disinflation costs under different central banking institutions during the 1990s. Results suggest that countries with more transparent central banks face lower costs of disinflation while accountability provisions have no clear effect on disinflation costs. My results also concord with earlier findings that the effect of monetary institutions is conditional on other features of the political environment.

Item Type: Article
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Additional Information: This is an electronic version of an Article published in the American Journal of Political Science 47(3) pp. 389-403 © 2003 Blackwell Publishing. 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 ( of the LSE Research Online website.
Divisions: LSE
Subjects: J Political Science > JA Political science (General)
Date Deposited: 06 Jul 2006
Last Modified: 02 Apr 2024 02:54

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