Why are Federal Central Banks more Activist?
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Publication date
2006
Authors
Roelfsema, Hein
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Document Type
Working paper
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Abstract
This paper analyzes monetary policy making by a committee of regional representatives in a currency union with asymmetric shocks. By considering strategic delegation of monetary policy making, we show that regional representatives in a federal policy making committee may be more activist than the average citizen in their district. Hence, in our model federal central banks such as the ECB and the FED respond more aggressively to output shocks when compared to individual central banks.
Keywords
Central Banking, Asymmetric Shocks, Federations, Strategic Delegation
Citation
Roelfsema, H J 2006 'Why are Federal Central Banks more Activist?' Discussion Paper Series / Tjalling C. Koopmans Research Institute, no. 06, vol. 06, UU USE Tjalling C. Koopmans Research Institute, Utrecht.