Locking-in Neoliberalism

2020 ◽  
pp. 216-248
Author(s):  
Aldo Madariaga
Keyword(s):  
Fiscal Policy ◽  
Exchange Rates ◽  
Central Banks ◽  
Policy Rules ◽  
Industrial Policies ◽  
Institutional Frameworks ◽  
Policy Alternatives ◽  
Bureaucratic Agencies ◽  
Lock In

This chapter focuses on the locking-in of exchange rates and industrial policies in institutional frameworks, including the constitution that reduced partisan influences and made future changes and reforms more difficult. It formulates and tests the operation of locking-in neoliberal policy alternatives through constitutionalization and the embeddedness of exchange rates and industrial policies in institutional frameworks. It also discusses the delegation of policymaking authority to nonelected bureaucratic agencies that lies at the heart of constitutionalized lock-in. The chapter emphasizes the importance of support creation and opposition blockade in reducing both representation and the agency of unelected bureaucrats in policymaking. It examines countries that attempted to lock-in neoliberalism through the establishment of independent central banks and fiscal policy rules.

Veto Players and the Choice of Monetary Institutions

2002 ◽  
Vol 56 (4) ◽  
pp. 775-802 ◽  
Author(s):  
Mark Hallerberg
Keyword(s):  
Fiscal Policy ◽  
Exchange Rates ◽  
Central Government ◽  
Central Banks ◽  
Veto Players ◽  
Coalition Governments ◽  
Systems Identification ◽  
And Control ◽  
Flexible Exchange Rates ◽  
Subnational Governments

I argue that two types of veto players matter in the choice of monetary institutions: party veto players and subnational governments, which are strong in federal systems but weak in unitary systems. A crucial issue is whether voters can readily identify the manipulation of the economy with party players. A second issue concerns the national party veto player's ability to control either fiscal or monetary policy. In one-party unitary governments identification and control are clear; parties where such governments are common prefer flexible exchange rates and dependent central banks. In multiparty coalition governments in unitary systems, identification is traditionally difficult, and the ability to target benefits to specific constituencies under fiscal policy makes fiscal policy autonomy more attractive for coalition governments. Such governments prefer central banks that are politically independent but that finance government debt. Under federalism, parties that constitute the central government have less control over fiscal policy and they prefer flexible exchange rates. Subnational governments do not support a dependent central bank that gives more power to the central government.

scholarly journals Issues in the Design of Fiscal Policy Rules

2015 ◽  
Vol 83 ◽  
pp. 56-86 ◽  
Author(s):  
Jonathan Portes ◽  
Simon Wren-Lewis
Keyword(s):  
Fiscal Policy ◽  
Policy Rules

The political economy of inflation

2021 ◽  
Vol 18 (3) ◽  
pp. 331-343
Author(s):  
Frances Coppola
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Money Supply ◽  
Central Banks ◽  
The Political ◽  
Economic Output ◽  
Political Choices ◽  
Redistributive Effects ◽  
Fiscal And Monetary Policy ◽  
Political Decisions

For the last 40 years, macroeconomics has been dominated by Milton Friedman’s view that inflation occurs when the supply of money rises more quickly than economic output – ‘too much money chasing too few goods’, as the saying goes. If inflation is always due to an imbalance of money supply and output, central banks alone determine the path of inflation, and fiscal policy merely has a redistributive function. This paper draws on historical and empirical evidence as well as recent theoretical literature to show that this view is mistaken. Monetary policy has redistributive effects, and fiscal policy affects the money supply. It is therefore impossible to separate them in practice. Both fiscal and monetary policy have inflationary consequences, and because their distributional effects are different, monetary policy cannot fully offset fiscal decisions. Fiscal and monetary policy are influenced by political decisions and are themselves political in nature. Since inflation reflects spending and saving patterns which are affected by political choices, it is fundamentally a political phenomenon.

Interakcje polityki pieniężnej i fiskalnej a niezależność banku centralnego – przegląd możliwych podejść modelowych w badaniach empirycznych

2020 ◽  
Author(s):  
Ryszard Kokoszczyński ◽  
Joanna Mackiewicz-Łyziak
Keyword(s):  
Fiscal Policy ◽  
Price Level ◽  
Empirical Studies ◽  
Central Banks ◽  
Overwhelming Majority ◽  
Monetary Policies ◽  
Sustainable Policy ◽  
Monetary And Fiscal Policy ◽  
Simple Models

There are numerous theoretical and empirical studies on interactions between monetary and fiscal policy. Even if the independence of central banks affects those interactions, it has rarely been directly included in those studies. In this chapter, we present two general approaches to empirical studies on interactions between those two policies and the possibilities for inclusion of independence of central banks in their modelling. Generally, the first approach has poor theoretic background and relies on simple models describing rules for fiscal and monetary policies. Those models also include proxies for some aspects of fiscal policy. Similarly, some simple measures usually address the independence of central banks. The second approach most often roots in the fiscal theory of the price level. The overwhelming majority of presented studies report a significant impact of the central banks’ independence in the form of a more sustainable policy using the first approach.

Financial and Monetary Stability Aspects of Global Stablecoins

2020 ◽  
Vol 53 (2) ◽  
pp. 159-185
Author(s):  
Stefan Schäfer ◽  
Oliver Read
Keyword(s):  
Exchange Rates ◽  
Banking System ◽  
Central Banks ◽  
Jel Classification ◽  
Monetary Stability ◽  
Digital Currency ◽  
National Currencies ◽  
Starting Point ◽  
The World ◽  
The One

Abstract Global stablecoins (GSCs) like Facebook’s Libra could prove much more instable than they might appear at first sight. Not only can their exchange rates against individual fiat currencies fluctuate substantially; theoretically, they also have the potential to replace national currencies, constitute “digital currency areas” and become the basis of a two-tier banking system with one and more GSC issuers, on the one hand, and, on the other hand, commercial banks that can create GSC deposit money. Against that background, all steps taken so far by supervisors and central banks can only be the starting point of what is necessary to effectively regulate the new normal of the world of money that is emerging. JEL Classification: E42, F65, G28, K24

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