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    Independent or lonely? Central banking in crisis

    Mabbett, Deborah and Schelkle, W. (2019) Independent or lonely? Central banking in crisis. Review of International Political Economy 26 (3), pp. 436-460. ISSN 0969-2290.

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    The financial crisis has called our understanding of central bank independence (CBI) into question. Central banks were praised for bold interventions but simultaneously criticized for overreaching their mandates. Central bankers themselves have complained that they are ‘the only game in town’. We develop the second generation theory of CBI to understand how independence can turn into loneliness when a financial crisis calls for cooperation between fiscal authorities and the central bank. Central banks are protected from interference when there are multiple political veto-players, but the latter can also block cooperation. Furthermore, central banks in multi-veto-player systems operate under legal constraints on their financial stabilization actions. They can circumvent these constraints, but this invites criticism and retribution. More surprisingly, central banks have strategically invoked their constraints in order to gain cooperation from political authorities.


    Item Type: Article
    Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis, available online at the link above.
    Keyword(s) / Subject(s): central bank independence, delegation, financial crisis, monetary policy, veto-players, strategic agents
    School: Birkbeck Faculties and Schools > Faculty of Humanities and Social Sciences > School of Social Sciences
    Depositing User: Deborah Mabbett
    Date Deposited: 03 Dec 2018 09:45
    Last Modified: 02 Aug 2023 17:46


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