Авторы: 147 А Б В Г Д Е З И Й К Л М Н О П Р С Т У Ф Х Ц Ч Ш Щ Э Ю Я

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General Macroeconomic Issues

How influential has the literature relating to time inconsistency, credibility

and reputation been to the development of politico-economic models?

In my case these contributions have been very influential. I think that this

literature has been an important driving force behind the new wave of politico-

economic models in the 1990s, although it is fair to say that now this

literature has a life of its own.

Why do governments create inflation?

One important reason is to try to reduce unemployment. A second reason

relates to the financing of budget deficits. Also, when inflation becomes

entrenched in the system it is costly to reduce it. These reasons may apply

differently to different countries, and at different points in time.

What is the relationship between political and economic instability? How has

the UK managed to combine political stability with a relatively poor economic

performance in the post-war period? How does this compare to the

Italian experience?

The UK has been ‘stable’ but very polarized. Conservative and Labour governments

have had very different programmes. On the other hand Italy has

had the opposite problem, namely frequent government changes but with

always the same people ending up in office. The result for Italy has been a

lack of fiscal discipline. However, concepts such as political stability and

polarization are difficult to measure in practice.

Should central banks have goal independence as well as instrument independence?

What is your view of the contracting approach suggested by Carl

Walsh?

Legislatures should set, once and for all, price stability (defined as low

inflation, between 0 and 3 per cent) as the sole goal of monetary policy.

Central banks should do whatever they want to achieve that goal. I do not

know whether you want to call this instrument or goal independence. Carl

Walsh [1995a] has produced a good paper but I would like to see further

work in a more political direction. For example, how does Walsh’s contracting

approach deal with the fact that in the real world we have partisan and

opportunistic politicians, rather than benevolent social planners?