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International audience; This chapter details the founding principles that can explain the drive towards central bank independence, and then looks at the consequences formal independence induces for the communication and understanding of monetary policy. The first part of the chapter examines the principles that have underpinned and stimulated the move towards independent central banks, and explains that these principles can be found in both the economic and legal domains. The second part examines how central banks deal with the accountability, transparency and disclosure requirements that flow from the independence principle itself. If central banks are independent, which constraints does this exerts on the need to communicate and explain monetary policy, to the markets and lay people.

Are local complementary currencies doomed? We analyse the conditions underlying the existence of these alternative monetary arrangements from the perspective of the two-sided platform theory. Considering their benefits to depend on the cross-externality generated by the presence of buyers and sellers using the alternative means of payment, we show that the possibility of the sustainability of such arrangements is weak. The result is established in a very general setting and with few restrictions on the parameters. Except in the presence of subsidies, the odds are low for local complementary currencies to survive.

International audience; If historical shocks influence educational outcomes, how long does the effect last, and does it differ among ethnic groups? This study answers these questions by exploiting the historical experiment of partition—that is the splitting of the British Raj into India and Pakistan—and by presenting a theoretical model that explains the trade-offs such a shock uncovers for different ethnic groups that have to decide between assimilation through education and maintaining their ethnic specificity. We use different rounds of Pakistan social and living standard measurement (PSLM) survey and analyze the educational outcomes of the grandchildren of partition (i.e., whose grandparents were born during the partition). We show that the scar from partition is long-lasting, as the present generation is still living under its influence. More importantly, our results reveal the different adaptation strategies of ethnic and cultural groups in the long run.

International audience; The paper analyzes the relations between the legal and regulatory production and the gains of popularity for the President and the Prime Minister in France. Using the GMM system estimation, we show that the Executive's popularity depends on legislative activism, creating reasons to legislate frantically, but also that the Executive has strong incentives to strategically set the legislative agenda, possibly timing landmark laws during honeymoon periods. Moreover, if Prime Ministers can benefit actions taken in the last months of their term, this is not true for Presidents. Our results also confirm the traditional view, according to which incumbents are always bestowed with favorable ratings when the economic situation improves.

International audience; We demonstrate that even though during WWII the interest rate was close to zero supporting the financing of the military effort, dissent inside the FOMC occurred with a similar frequency to other policy episodes. Our analysis highlights that the debates which resulted in dissents turned around two broad issues: the size of the Fed’s balance sheet as well as the functioning of and communication with financial markets. Thus, we argue that the conventional view depicting the Fed as merely accommodating treasury needs should be revised. Our detailed investigation of dissents emphasises the modernity of the objections raised by Fed officials.

This paper sheds some new light on the determinants of FOMC members? monetary policy preferences. For thatpurpose, we use a new dataset of macroeconomic indicators for the Fed districts, as well as preferences revealed byFOMC members in the Transcripts, to compute a desired interest rate for each individual member. First, we find thatFOMC members react to the regional unemployment rate. Second, individuals holding a Master or Bachelor degree,and issued from either the central bank, or from the private or public sector have a higher propensity to disagree onthe dovish side, while women tend to disagree on the hawkish side. These findings provide further insights for centralbank watchers about the upcoming policy decisions that are likely to be implemented by the FOMC, following thecomposition of its committee and the evolution of regional cycles.

International audience; This paper examines the modalities of risk sharing in the United States, and their evolution between the pre-financial crisis period and the post-crisis one. Reassessing the mechanisms at play in the US economy, we document a lower share of adjustment coming from capital markets, in comparison to previous estimates. The measures taken during the crisis have not impacted the absolute degree of risk sharing, although the relative size of its components has changed, with a stronger role for the federal government.

International audience

This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model generate a pendulum-like switch from markets to a centrally-planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized to have led to the discovery of a trade-off between equality and efficiency at the scale of alternative economic systems. While our focus is on the long-run transitions from capitalism to communism and back observed in the course of the 20-th century, the model also derives conditions under which the two systems converge and become stable.

This study examines public opinion in 15 European countries, on the proposal to establish an independent European Central Bank (ECB). Using data from Euro- barometer surveys for 1998 to 2000, which included a speci c question on this issue, we show that in ation performance is not su cient to explain people's preference for an independent central bank: personal characteristics and circumstances have a stronger impact, with gender, employment status, education level, income quartiles, and degree of information and civic concern showing particular relevance.

This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model generate a pendulum-like switch from markets to a centrally-planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized to have led to the discovery of a trade-off between equality and efficiency at the scale of alternative economic systems. While our focus is on the long-run transitions from capitalism to communism and back observed in the course of the 20-th century, the model also derives conditions under which the two systems converge and become stable.

International audience

This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model generate a pendulum-like switch from markets to a centrally-planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized to have led to the discovery of a trade-o¤ between equality and efficiency at the scale of alternative economic systems. While our focus is on the long-run transitions from capitalism to communism and back observed in the course of the 20-th century, the model also derives conditions under which each of the systems can remain stable., Current version uploaded April 2013.

In this paper, we consider if extreme policies in terms of more polarized budgets can occur under the two following assumptions: (i) voter's preferences are skewed by the history of the budget structure, a fact that politicians can use to influence their probability of reelection and the policy of their successors, (ii) fiscal rules are imposed on the budget. The first assumption is now relatively common in Public Economics (see for example, Laffont and Tirole, 1993, chap. 9, 10), and has been empirically verified. The second assumption has been the focus of a huge literature since the European Union began to consider implementing a common currency. We explore several fiscal rules that are variations on two well-known rules: the now famous golden rule, as in the United Kingdom, where only interest rate payments can generate debt, and a balanced-budget rule. Theoretically, we build on Alesina and Tabellini (1990), Tabellini and Alesina (1990), and the recent elaboration on these by Matsen and Thøgersen (2007). The political arena is thus one with partisan politicians, the degree of partisanship being expressed in a different allocation of budget resources. In our setting, we consider politicians more or less inclined towards favoring infrastructure or operating expenditures. Such an assumption has recently found empirical support, e.g. by Veiga and Veiga (2007a, b). This partisanship use of budget, plus the assumption of voters getting used to some levels of public goods spending (habit effect) gives the incumbent an incentive to distort the allocation to try to lure more voters, thus boosting her re-election probability. Though Matsen and Thøgersen (2007) show that, in such a framework, the incumbent's optimal policy features both a more polarized allocation of the public resources and a debt bias, we verify if these results hold when the incumbent is confronted with fiscal policy rules.

This paper relates the volatility of interest rates to the collective nature of monetary policymaking in monetary unions. Several decision rules are modelled, including hegemonic and democratic procedures, and also committees headed by a chairman. A ranking of decision rules in terms of the volatility of policy rates is obtained, showing that the presence of a chairman has a cooling effect. However, members of a monetary union are better off under symmetric rules (voting, averaging, bargaining), unless they themselves chair the union. The results are robust to the inclusion of heterogeneities among members of the monetary union., info:eu-repo/semantics/published