Eggertsson, Gauti B.; Borgne, Eric Le - International Monetary Fund (IMF) - 2003
We propose a theory to explain why, and under what circumstances, a politician gives up rent and delegates policy tasks … to an independent agency. We apply this theory to monetary policy by extending a standard dynamic "New …-Keynesian" stochastic general equilibrium model. This model gives a new theory of central bank independence that is unrelated to the …