Monetary Politics in a Monetary Union: A Note on Common Agency with Rational Expectations
Title: Monetary Politics in a Monetary Union: A Note on Common Agency with Rational Expectations
Author: RUTA, Michele
Series/Report no.: EUI RSCAS; 2007/21
Is the politicisation of monetary policy in a currency union desirable? This paper shows that in a setting where political influence by national governments is modeled as a common agency game with rational expectations, the answer to this question crucially depends on whether the common central bank can commit to follow its policy.
Subject: Common Agency; Political Pressures; European Monetary Union; F33; E58; D78
Type of Access: openAccess