The political economy of monetary institutions

William Bernhard, J. Lawrence Broz, William Roberts Clark

Research output: Contribution to journalReview articlepeer-review


In recent decades, countries have experimented with a variety of monetary institutions, including alternative exchange-rate arrangements and different levels of central bank independence. Political economists have analyzed the choice of these institutions, emphasizing their role in resolving both the time-inconsistency problem and dilemmas created by an open economy. This "first-generation" work. however, suffers from a central limitation: it studies exchange-rate regimes and central bank institutions in isolation from one another without investigating how one monetary institution affects the costs and benefits of the other. By contrast, the contributors to this volume analyze the choice of exchange-rate regime and central bank independence together and, in so doing, present a "second generation" of research on the determinants of monetary institutions. The articles incorporate both economic and political factors in explaining the choice of monetary institutions, investigating how political institutions, democratic processes, political party competition, and interest group pressures affect the balance between economic and distributional policy objectives.

Original languageEnglish (US)
Pages (from-to)693-723
JournalInternational Organization
Issue number4
StatePublished - Sep 2002

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations
  • Organizational Behavior and Human Resource Management
  • Law


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