Central Bank Independence, Democracy, and Dollarization
Allan Drazen ,
1
( 5 )
Journal of Applied Economics
1-17
May
2002
JAE.pdf72.01 KB
Abstract

Is there a fundamental conflict between insulating monetary policy from popular pressures, seen as essential to sound monetary policy, and making policy responsive to the popular will, seen as fundamental to democracy? We argue that strongly independent monetary policy is not inconsistent with democratic control of policymaking, once one realizes that a key feature of democratic policymaking is the decision to remove some decisions from "day-to-day" political pressures.

Links to Researchers