The Political Economy of Central Banking: Historical Perspectives

Stefano Ugolini (1)

1 LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux

The question of the relationship between monetary and fiscal authorities seems to be more complex than the recent debate on central bank independence would suggest. In the simple framework inspired by Sargent and Wallace (1976), the recipe for establishing an untarnished confidence in central bank money consisted in severing all links between governments and central bankers. In reality, however, monetary and fiscal authorities can hardly be separated at all: in fact, they are the two sides of the same coin – which is, the modern state. The idea that monetary and fiscal authorities can live their lives oblivious of each other does not seem to be validated by historical evidence.

Keywords: Political Economy; Central banking; Monetary Policy; Fiscal Policy

Domains: Economics and Finance; History

Stefano Ugolini. The Political Economy of Central Banking: Historical Perspectives. A Changing Role for Central Banks? 41st Economic Conference, Oesterreichische Nationalbank, pp.52-58, 2013. ⟨hal-01294446⟩