Veto Players and the Choice of Monetary Institutions

  • I argue that two types of veto players matter in the choice of monetary institutions: party veto players and subnational governments, which are strong in federal systems but weak in unitary systems. A crucial issue is whether voters can readily identify the manipulation of the economy with party players. A second issue concerns the national party veto player's ability to control either fiscal or monetary policy. In one-party unitary governments identification and control are clear; parties where such governments are common prefer flexible exchange rates and dependent central banks. In multiparty coalition governments in unitary systems, identification is traditionally difficult, and the ability to target benefits to specific constituencies under fiscal policy makes fiscal policy autonomy more attractive for coalition governments. Such governments prefer central banks that are politically independent but that finance government debt. Under federalism, parties that constitute the central government have less control over fiscal policy and they prefer flexible exchange rates. Subnational governments do not support a dependent central bank that gives more power to the central government.

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Metadaten
Document Type:Article
Language:English
Author(s):Mark HallerbergORCiD
Parent Title (English):International Organization
ISSN:1531-5088
Publication year:2002
Publishing Institution:Hertie School
First Page:775
Last Page:802
DOI:https://doi.org/10.1162/002081802760403775
Release Date:2018/10/01
Volume:56
Issue:4
Licence of document (German):Metadaten / metadata
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