Skip to main content
SpringerLink
Log in

Macroeconomic Consensus and Political Economy Aspects of Monetary Policy Design

  • Chapter
Macroeconomics, Finance and Money

  • 483 Accesses

Abstract

Philip Arestis’s contributions in modern macroeconomics span an impressively wide range of topics and appear in the large number of papers that he authored. The common characteristic shared by all those contributions is the timeliness and relevance to the main macroeconomic debates that have arisen over the years. Philip Arestis’s contributions cover topics as diverse as the link between financial development and economic growth (e.g., Arestis and Demetriades, 1997; Arestis et al. 2001; Arestis et al. 2006), the potential of Keynesian economic policies (e.g., Arestis and Sawyer, 1998), the role of fiscal policy, the endogeneity of money (e.g., Arestis and Sawyer, 2006), monetary policy, the housing market and its implication for the macroeconomy (e.g., Arestis and Karakitsos, 2008), and the effectiveness of inflation targeting (Arestis et al. 2001; Angeriz and Arestis, 2007, 2008), to name just a few. A main focus of his work has been the ‘new consensus’ in macroeconomics as it emerged over the last two decades, that is, the ‘New Neoclassical Synthesis’ (e.g., Arestis, 2007; Arestis and Sawyer, 2008).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Akerlof, G.A. (2007), ‘The Missing Motivation in Macroeconomics’, American Economic Review, 97(1), 5–36.

    Article  Google Scholar 

  • Alesina, A. (1995), ‘Comment to “The Unending Search for Monetary Salvation,” by S. Fischer’, in NBER Macroeconomics Annual, MIT Press.

    Google Scholar 

  • Alesina, A., and A. Drazen (1991), ‘Why Are Stabilizations Delayed?’, American Economic Review, Vol. 81, 1170–88.

    Google Scholar 

  • Alesina, A., N. Roubini and G.D. Cohen (1997), Political Cycles and the Macroeconomy, MIT Press.

    Google Scholar 

  • Angeriz, A. and P. Arestis (2007), ‘Assessing the Performance of “Inflation Targeting Lite” Countries’, The World Economy, Vol. 30(11), 1621–45.

    Article  Google Scholar 

  • Angeriz, A. and P. Arestis (2008), ‘Assessing inflation targeting through intervention analysis’, Oxford Economic Papers, Vol. 60(2), 293–317.

    Article  Google Scholar 

  • Arestis, P. (ed.) (2007), Is There a New Consensus in Macroeconomics?, Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Arestis, P. and P. Demetriades (1997), ‘Financial Development and Economic Growth: Assessing the Evidence’, Economic Journal, Vol. 107(442), 783–99.

    Article  Google Scholar 

  • Arestis, P., G.M. Caporale and A. Cipollini (2002), ‘Does Inflation Targeting Affect the Trade-Off between Output Gap and Inflation Variability?’, Manchester School, Vol. 70(4), 528–45.

    Article  Google Scholar 

  • Arestis P., G. Chortareas and E. Desli (2006), ‘Financial Development and Productive Efficiency in OECD Countries: An Exploratory Analysis’, Manchester School, Vol. 74(4), 417–40.

    Article  Google Scholar 

  • Arestis, P., P. Demetriades and K. Luintel (2001), ‘Financial Development and Economic Growth: The Role of Stock Markets’, Journal of Money, Credit and Banking, Vol. 33(1), 16–41.

    Article  Google Scholar 

  • Arestis, P. and E. Karakitsos (2008), ‘The U.S. housing slump and the consumer’, Journal of Post Keynesian Economics, Vol. 30(3), 335–52.

    Article  Google Scholar 

  • Arestis, P. and M. Sawyer (1998), ‘Keynesian Economic Policies for the New Millennium’, Economic Journal, Vol. 108(446), 181–95.

    Article  Google Scholar 

  • Arestis, P. and M. Sawyer (2005), ‘Aggregate demand, conflict and capacity in the inflationary process’, Cambridge Journal of Economics, Vol. 29(6), 959–74.

    Article  Google Scholar 

  • Arestis, P. and M. Sawyer (2006), ‘The nature and role of monetary policy when money is endogenous’, Cambridge Journal of Economics, Vol. 30(6), 847–60.

    Article  Google Scholar 

  • Arestis, P. and M. Sawyer, (2008), ‘A critical reconsideration of the foundations of monetary policy in the new consensus macroeconomics framework’, Cambridge Journal of Economics, Vol. 32(5), 761–79.

    Article  Google Scholar 

  • Barro, R. and D. Gordon (1983), ‘Rules, Discretion, and Reputation in a Model of Monetary Policy’, Journal of Monetary Economics, Vol. 12(1), 101–21.

    Article  Google Scholar 

  • Bernheim, B.D., and M.D. Winston (1986a), ‘Common Agency’, Econometrica, Vol. 54(4), 923–42.

    Article  Google Scholar 

  • Bernheim, B.D., and M.D. Winston (1986b), ‘Menu Auctions, Resource Allocation, and Economic Influence’, Quarterly Journal of Economics, Vol. 101, Issue 1, 1–31.

    Article  Google Scholar 

  • Blanchard, O.J. (2008), ‘The State of Macro’, National Bureau of Economic Research (NBER), working paper no. W14259.

    Book  Google Scholar 

  • Blinder, Alan S. (1998), Central Banking in Theory and Practice. MIT Press.

    Google Scholar 

  • Brunner, K. (1985), ‘Monetary Policy and Monetary Order’, in Monetary Policy and.Monetary Regimes, Graduate School of Management, University of Rochester.

    Google Scholar 

  • Chari, V.V. and Patrick J. Kehoe (2007), ‘The Heterogeneous State of Modern Macroeconomics: A Reply to Solow’, NBER working paper no. 13655, November.

    Book  Google Scholar 

  • Chari, V.V., Patrick J. Kehoe, and Ellen R. McGrattan (2009), ‘Convergence in Macroeconomics: New Keynesian Models Are Not Yet Ready for Monetary Analysis’, AEJ Macroeconomics, Vol. 1(1), 242–66.

    Article  Google Scholar 

  • Chortareas, G.E., and S.M. Miller (2003), ‘Monetary Policy Delegation, Contract Costs, and Contract Targets’, Bulletin of Economic Research, Vol. 55(1), 101–12.

    Article  Google Scholar 

  • Chortareas, G.E., and S.M. Miller (2004), ‘Optimal Central Banker Contracts and Common Agency’, Public Choice, Vol. 121, 131–55.

    Article  Google Scholar 

  • Chortareas, G.E., and S.M. Miller (2010), ‘The Principal–Agent Approach to Monetary Policy Delegation’, forthcoming in P. Siklos and M. Wohar (eds), Frontiers of Central Banking, Cambridge University Press.

    Google Scholar 

  • Dixit, A. (1996a), ‘Special-Interest Lobbying and Endogenous Commodity Taxation’. Eastern Economic Journal, Vol. 22(4), 375–87.

    Google Scholar 

  • Dixit, A.K. (1996b), The Making of Economic Policy: A Transaction-Cost Politics Perspective. MIT Press.

    Google Scholar 

  • Dixit, A.K. and H. Jensen (2000), ‘Equilibrium Contracts for the Central Bank of a Monetary Union’, mimeo.

    Google Scholar 

  • Dixit, A., E. Helpman, and G.M. Grossman (1997), ‘Common Agency and Coordination: General Theory and Application to Government Policy Making’, Journal of Political Economy, Vol. 105(4), 752-69.

    Article  Google Scholar 

  • Eichengreen, B. (1996), ‘A More Perfect Union? The Logic of Economic Integration’, Essays in International Finance, No. 198, Princeton University.

    Google Scholar 

  • Fratianni, M., J. Von Hagen and C. Waller (1997), ‘Central Banking as a Political Principal–Agent Problem’, Economic Inquiry, Vol. 35, 378–93.

    Article  Google Scholar 

  • Garfinkel, M.R., and S. Oh (1993), ‘Strategic Discipline in Monetary Policy with Private Information’, American Economic Review, Vol. 83(1), 99–117.

    Google Scholar 

  • Gordon, R.M. (1975), ‘The Demand and Supply of Inflation’, Journal of Law and Economics, Vol. 18(3), 807–36.

    Article  Google Scholar 

  • Grossman, G. and E. Helpman (1994a), ‘Protection for Sale’, American Economic Review, Vol. 84, 833–50.

    Google Scholar 

  • Grossman, G. and E. Helpman (1994b), ‘Electoral Competition and Special Interest Politics’, Review of Economic Studies, Vol. 63, 265–86.

    Article  Google Scholar 

  • Grossman, G. and E. Helpman (1995), ‘Trade Wars and Trade Talks’, Journal of Political Economy, Vol. 103(4), 675–708.

    Article  Google Scholar 

  • Henning, R.C. (1994), Currencies and Politics in the United States, Germany and Japan. Institute for International Economics.

    Google Scholar 

  • Hetzel, R. (1990), ‘The Political Economy of Monetary Policy’, in T. Mayer (ed.) The Political Economy of American Monetary Policy, Cambridge University Press.

    Google Scholar 

  • Jensen, H. (1997), ‘Credibility of Optimal Monetary Delegation’, American Economic Review, Vol. 87(5), 911–20.

    Google Scholar 

  • Krusel, P. and J. Rios-Rull (1996), ‘Vested Interests in a Positive Theory of Stagnation and Growth’, Review of Economic Studies, Vol. 63, 301–29.

    Article  Google Scholar 

  • Laffont, J.J. and J. Tirole (1993), A Theory of Incentives in Procurement and Regulation. MIT Press.

    Google Scholar 

  • Leiderman, L. and L.E.O. Svensson (eds) (1995), Inflation Targets, London, Centre for Economic Policy Research; distributed in North America by the Brookings Institution, Washington, D.C.

    Google Scholar 

  • Levy, P.I. (1999), ‘Lobbying and International Cooperation in Tariff Setting’, Journal of International Economics, Vol. 47(2), April, 345–70.

    Article  Google Scholar 

  • Mankiw, N.G. (2006), ‘The Macroeconomist as Scientist and Engineer’, Journal of Economic Perspectives, Vol. 20(4), 29–46.

    Article  Google Scholar 

  • Mankiw, N.G. (1990), ‘A Quick Refresher Course in Macroeconomics’, Journal of Economic Literature, Vol. XXVIII (December), 1645–60.

    Google Scholar 

  • Mayer, T. (ed.) (1990), The Political Economy of American Monetary Policy. Cambridge University Press.

    Google Scholar 

  • McCallum, B.T. (1995), ‘Two Fallacies Concerning Central Bank Independence’, American Economic Review Papers and Proceedings, Vol. 85, 207–11.

    Google Scholar 

  • McCallum, B.T. (1997), ‘Crucial Issues Concerning Central Bank Independence’, Journal of Monetary Economics, Vol. 39(1), June, 99–112.

    Article  Google Scholar 

  • Olson, M. (1965), The Logic of Collective Action: Public Goods and the Theory of Groups, Cambridge: Harvard Economic Studies 124, Harvard University Press.

    Google Scholar 

  • Persson, T. (1998), ‘Economic Policy and Special Interest Politics’, Economic Journal, March, 310–27.

    Google Scholar 

  • Persson, T. and G. Tabellini (1993), ‘Designing Institutions for Monetary Stability’, Carnegie-Rochester series on Public Policy, Vol. 39, 33–84.

    Article  Google Scholar 

  • Posen, A. (1993), ‘Why Central Bank Independence Does Not Cause Low Inflation: There Is No Institutional Fix for Politics’, in Richard O’Brien (ed.) Finance and the International Economy: 7. Oxford University Press for The Amex Bank Review, 41–54.

    Google Scholar 

  • Posen, A. (1995), ‘Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence’, in NBER Macroeconomics Annual, MIT Press, 252–74.

    Google Scholar 

  • Rogoff, K. (1985), ‘The Optimal Degree of Commitment to an Intermediate Monetary Target’, Quarterly Journal of Economics, Vol. 100 (November), 1169–89.

    Article  Google Scholar 

  • Solow, R. (2008), ‘Comments’, Journal of Economic Perspectives, 22(1): 243–7.

    Article  Google Scholar 

  • Spiller, P.T. (1990), ‘Politicians, Interest Groups, and Regulators: A Multiple Principals Agency Theory of Regulation, or “Let Them Be Bribed”’, Journal of Law and Economics, Vol. 33, April, 65–101.

    Article  Google Scholar 

  • Svensson, L.E.O. (1997), ‘Optimal Inflation Targets, “Conservative” Central Banks, and Linear Inflation Contracts’, American Economic Review, Vol. 87, 98–114.

    Google Scholar 

  • Waller, C.J. (1992), ‘The Choice of a Conservative Central Banker in a Multisectoral Economy,’ American Economic Review, Vol. 82(4), 1006–12.

    Google Scholar 

  • Waller, C.J. (1995), ‘Performance Contracts for Central Bankers’, Federal Reserve Bank of St Louis, Economic Review, September/October, 3–14.

    Google Scholar 

  • Walsh, C.E. (1995a), ‘Optimal Contracts for Central Bankers’, American Economic Review, Vol. 85(1), 150–67.

    Google Scholar 

  • Walsh, C.E. (1995b), ‘Is New Zealand’s Reserve Bank Act of 1989 an Optimal Central Bank Contract?’, Journal of Money, Credit and Banking, Vol. 27(4), 1179–91.

    Article  Google Scholar 

  • Walsh, C.E. (2003), Monetary Theory and Policy, Cambridge, MA: MIT Press.

    Google Scholar 

  • Weingast, B.R., K.A. Shepsle and C. Johnsen (1981), ‘The Political Economy of Benefits and Costs: A Neoclassical Approach to Redistributive Politics’, Journal of Political Economy, Vol. 89(4), pp. 642–64.

    Article  Google Scholar 

  • Woodford, M. (2009), ‘Convergence in Macroeconomics: Elements of the New Synthesis’, AEJ Macroeconomics, Vol. 1(1), 267–79.

    Article  Google Scholar 

Download references

Authors
  1. Georgios Chortareas
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Giuseppe Fontana John McCombie Malcolm Sawyer

Copyright information

© 2010 Georgios Chortareas

About this chapter

Cite this chapter

Chortareas, G. (2010). Macroeconomic Consensus and Political Economy Aspects of Monetary Policy Design. In: Fontana, G., McCombie, J., Sawyer, M. (eds) Macroeconomics, Finance and Money. Palgrave Macmillan, London. https://doi.org/10.1057/9780230285583_5

Download citation

Publish with us

Policies and ethics

Search

Navigation