Federalism and central bank independence: The politics of German monetary policy, 1957-92

World Politics

Volumn 50, Issue 3, 1998, Pages 401-446

  Lohmann, Susanne ^a  

^a NONE

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[No Author keywords available]

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EID: 0000196824     PISSN: 00438871     EISSN: None     Source Type: Journal    
DOI: 10.1017/S0043887100012867     Document Type: Review

References (82)

1. Finn E. Kydland and Edward C. Prescott, "Rules Rather than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy 85 (June 1977); Robert J. Barro and David B. Gordon, "Rules, Discretion and Reputation in a Model of Monetary Policy," Journal of Monetary Economics 12 (July 1983).
2. Finn E. Kydland and Edward C. Prescott, "Rules Rather than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy 85 (June 1977); Robert J. Barro and David B. Gordon, "Rules, Discretion and Reputation in a Model of Monetary Policy," Journal of Monetary Economics 12 (July 1983).
3. Kenneth Rogoff, "The Optimal Degree of Commitment to an Intermediate Monetary Target," Quarterly Journal of Economics 100 (November 1985); Susanne Lohmann, "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review 82 (March 1992).
4. Kenneth Rogoff, "The Optimal Degree of Commitment to an Intermediate Monetary Target," Quarterly Journal of Economics 100 (November 1985); Susanne Lohmann, "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review 82 (March 1992).
5. William D. Nordhaus, "The Political Business Cycle," Review of Economic Studies 42 (April 1975).
6. Douglas Hibbs, "Political Parties and Macroeconomic Policy," American Political Science Review 71 (December 1977); Alberto Alesina, "Macroeconomic Policy in a Two-Party System as a Repeated Game," Quarterly Journal of Economics 102 (August 1987).
7. Douglas Hibbs, "Political Parties and Macroeconomic Policy," American Political Science Review 71 (December 1977); Alberto Alesina, "Macroeconomic Policy in a Two-Party System as a Repeated Game," Quarterly Journal of Economics 102 (August 1987).
8. Empirical measures of legal versus behavioral central bank independence are discussed in Sylvester Eijffinger and Jakob de Haan, The Political Economy of Central-Bank Independence, Special Papers in International Economics, no. 19 (Princeton: Princeton University, May 1996).
9. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
10. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
11. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
12. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
13. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
14. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
15. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
16. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
17. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
18. Bruno S. Frey and Friedrich Schneider, "Central Bank Behavior: A Positive Empirical Analysis," Journal of Monetary Economics 7 (May 1981); Byung Hee Soh, "Political Business Cycles in Industrialized Democratic Countries," Kyklos 39 (1986); Manfred J. M. Neumann and Susanne Lohmann, "Political Business Cycles in Industrialized Democratic Countries: A Comment," Kyklos 40 (1987); Alberto Alesina and Nouriel Roubini, "Political Cycles in OECD Economies," Review of Economic Studies 59 (October 1992); Günter Lang and Peter Welzel, "Budgetdefizite, Wahlzyklen und Geldpolitik: Empirische Ergebnisse für die Bundesrepublik Deutschland, 1962-1989," Jahrbücher für Nationalökonomie und Statistik 210 (1992); Brian Loynd and R. Michael Alvarez, "Political Control of Central Banking: Is There a Role for Bank Autonomy?" (Manuscript, Duke University, 1992); Roland Vaubel, "Eine Public-Choice-Analyse der Deutschen Bundesbank und ihre Implikationen für die Europäische Währungsunion," in Dieter Duwendag and Jürgen Siebke, eds., Europa vor dem Eintritt in die Wirtschafts- und Währungsunion (Europe before the entry into the economic and monetary union), Publications of the Verein für Socialpolitik, new series no. 220 (Berlin: Duncker and Humbolt, 1993); Bernhard Eschweiler and Michael D. Bordo, "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989," in Pierre Siklos, ed., Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union (Dordrecht: Kluwer, 1994); David R. Johnson and Pierre L. Siklos, "Political Effects on Central Bank Behavior. Some International Evidence," in Siklos; Helge Berger and Ulrich Woitek, "Searching for Political Business Cycles in Germany," Public Choice 91 (April 1997); idem, "How Opportunistic Are Partisan German Central Bankers? Evidence on the Vaubel Hypothesis," European Journal of Political Economy 13 (1997).
19. Susanne Lohmann, David Brady, and Douglas Rivers, "Party Identification, Retrospective Voting, and Moderating Elections in a Federal System: West Germany, 1961-1989," Comparative Political Studies 30 (August 1997).
20. Vaubel (fn. 6).
21. Dieter Balkhausen, Gutes Geld und Schlechte Politik: Der Report über die Bundesbank (Good money and bad politics: The report on the Bundesbank) (Düsseldorf: Econ, 1992), 139-40; see also Ellen Kennedy, The Bundesbank: Germany's Central Bank in the International Monetary System (New York: Council on Foreign Relations Press, 1991), chap. 3.
22. Dieter Balkhausen, Gutes Geld und Schlechte Politik: Der Report über die Bundesbank (Good money and bad politics: The report on the Bundesbank) (Düsseldorf: Econ, 1992), 139-40; see also Ellen Kennedy, The Bundesbank: Germany's Central Bank in the International Monetary System (New York: Council on Foreign Relations Press, 1991), chap. 3.
23. "Auf Druck von Oben," Der Spiegel 39 (September 26, 1994), 105.
24. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper, 1942), 293.
25. Kennedy (fn. 9), 8.
26. David Marsh, Die Bundesbank: Geschäfte mit der Macht (The Bundesbank: Doing business with power) (Munich: Berteismann 1992), 33.
27. Nathaniel Beck, "Presidential Influence on the Federal Reserve in the 1970s" American Journal of Political Science 26 (August 1982); John T. Woolley, Monetary Politics: The Federal Reserve and the Politics of Monetary Policy (Cambridge: Cambridge University Press, 1984); Kevin B. Grier, "Congressional Influence on Monetary Policy: An Empirical Test," Journal of Monetary Economics 28 (October 1991); Henry W. Chappell, Thomas M. Havrilesky, and Rob Roy McGregor, "Partisan Monetary Policies: Presidential Influence through the Power of Appointment," Quarterly Journal of Economics 108 (February 1993); Thomas Havrilesky, The Pressures on American Monetary Policy (Dordrecht: Kluwer, 1995).
28. Nathaniel Beck, "Presidential Influence on the Federal Reserve in the 1970s" American Journal of Political Science 26 (August 1982); John T. Woolley, Monetary Politics: The Federal Reserve and the Politics of Monetary Policy (Cambridge: Cambridge University Press, 1984); Kevin B. Grier, "Congressional Influence on Monetary Policy: An Empirical Test," Journal of Monetary Economics 28 (October 1991); Henry W. Chappell, Thomas M. Havrilesky, and Rob Roy McGregor, "Partisan Monetary Policies: Presidential Influence through the Power of Appointment," Quarterly Journal of Economics 108 (February 1993); Thomas Havrilesky, The Pressures on American Monetary Policy (Dordrecht: Kluwer, 1995).
29. Nathaniel Beck, "Presidential Influence on the Federal Reserve in the 1970s" American Journal of Political Science 26 (August 1982); John T. Woolley, Monetary Politics: The Federal Reserve and the Politics of Monetary Policy (Cambridge: Cambridge University Press, 1984); Kevin B. Grier, "Congressional Influence on Monetary Policy: An Empirical Test," Journal of Monetary Economics 28 (October 1991); Henry W. Chappell, Thomas M. Havrilesky, and Rob Roy McGregor, "Partisan Monetary Policies: Presidential Influence through the Power of Appointment," Quarterly Journal of Economics 108 (February 1993); Thomas Havrilesky, The Pressures on American Monetary Policy (Dordrecht: Kluwer, 1995).
30. Nathaniel Beck, "Presidential Influence on the Federal Reserve in the 1970s" American Journal of Political Science 26 (August 1982); John T. Woolley, Monetary Politics: The Federal Reserve and the Politics of Monetary Policy (Cambridge: Cambridge University Press, 1984); Kevin B. Grier, "Congressional Influence on Monetary Policy: An Empirical Test," Journal of Monetary Economics 28 (October 1991); Henry W. Chappell, Thomas M. Havrilesky, and Rob Roy McGregor, "Partisan Monetary Policies: Presidential Influence through the Power of Appointment," Quarterly Journal of Economics 108 (February 1993); Thomas Havrilesky, The Pressures on American Monetary Policy (Dordrecht: Kluwer, 1995).
31. Nathaniel Beck, "Presidential Influence on the Federal Reserve in the 1970s" American Journal of Political Science 26 (August 1982); John T. Woolley, Monetary Politics: The Federal Reserve and the Politics of Monetary Policy (Cambridge: Cambridge University Press, 1984); Kevin B. Grier, "Congressional Influence on Monetary Policy: An Empirical Test," Journal of Monetary Economics 28 (October 1991); Henry W. Chappell, Thomas M. Havrilesky, and Rob Roy McGregor, "Partisan Monetary Policies: Presidential Influence through the Power of Appointment," Quarterly Journal of Economics 108 (February 1993); Thomas Havrilesky, The Pressures on American Monetary Policy (Dordrecht: Kluwer, 1995).
32. Neumann, "Precommitment by Central Bank Independence," Open Economies Review 2 (1991).
33. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
34. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
35. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
36. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
37. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
38. Nordhaus (fn. 3) formulated his hypothesis assuming adaptive inflation expectations and myopic voters. The Nordhaus hypothesis with rational inflation expectations and rational retrospective voting is developed by Torsten Persson and Guido Tabellini, Macroeconomic Policy, Credibility and Politics (Chur, Switzerland: Harwood Academic Publishers, 1990); Susanne Lohmann, "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics 10 (March 1998); idem, "Democracy, Inflation, and Growth: The Lucas Island Model Revisited" (Manuscript, UCLA, 1997); see also Kenneth Rogoff and Anne Sibert, "Elections and Macroeconomic Policy Cycles," Review of Economic Studies 55 (January 1988); and Kenneth Rogoff, "Equilibrium Political Budget Cycles," American Economic Review 80 (March 1990). Alesina (fn. 4) adds rational expectations to the Hibbs (fn. 4) model; see also Henry W. Chappell and William R. Keech, "Party Differences in Macroeconomic Policies and Outcomes," American Economic Review, Papers and Proceedings 76 (May 1986).
39. The Vaubel hypothesis is formally developed in Susanne Lohmann, "Institutional Checks and Balances and the Political Control of the Money Supply," Oxford Economic Papers 50 (July 1998).
40. The median voter hypothesis is formally developed in Susanne Lohmann, "Partisan Control of the Money Supply and Decentralized Appointment Powers," European Journal of Political Economy 13 (1997).
41. For documentation of the primary and secondary sources I use, see Susanne Lohmann, "Designing a Central Bank in a Federal System: The Deutsche Bundesbank, 1957-1992," in Siklos (fn. 6).
42. John Goodman, "The Politics of Central Bank Independence," Comparative Politics 23 (April 1991), 337.
43. Ludwig Erhard in 1966, Kurt Georg Kiesinger in 1969, and Helmut Schmidt in 1982; see Marsh (fn. 13), 225.
44. Karl Otto Pöhl in 1992; see Marsh (fn. 13), chap. 8.
45. Primary sources on the debate are collected in Deutsche Bundesbank, Dreißigjahre Deutsche Bundesbank: Die Entstehung des Bundesbankgesetzes vom 26.Juli 1957 (Thirty years Deutsche Bundesbank: The genesis of the Bundesbank Law of July 26, 1957) (Frankfurt am Main: Deutsche Bundesbank, 1988).
46. Wilhelm Könneker, "Vom Zentralbanksystem zur Deutschen Bundesbank," Zeitschrift für das gesamte Kreditwesen 20 (1957), 796.
47. Karl Christian Kaltenthaler, "The Bundesbank and German Federalism: The Politics of Institutional Change" (Manuscript, Washington University at St. Louis, 1992), 2-3.
48. Dietrich Dickertmann, "Deutsche Bundesbank: Landeszentralbanken vor einer Strukturreform?" (Deutsche Bundesbank: Land central banks facing a structural reform?) (Manuscript, University of Trier, 1991).
49. Rolf Caesar, Der Handlungsspielraum von Notenbanken (The discretionary leeway of central banks) (Baden-Baden: Nomos, 1981); Vaubel (fn. 6); Lohmann (fn. 19).
50. Maxfield, "Financial Incentives and Central Bank Authority in Industrializing Nations," World Politics 46 (July 1994).
51. GNP is the standard measure of economic performance in German national income statistics; many other countries (including the United States) use gross domestic product instead. The exchange rate between the deutsche mark and the U.S. dollar is chosen because a significant amount of world trade is invoiced in dollars, and because the deutsche mark and the dollar are close substitutes in their role as international reserve currencies.
52. Here I follow Lang and Welzel (fn. 6).
53. I use 115 observations and not the 120 that might be expected for quarterly data covering the time period 1960-89. This is because of the loss of the first five observations that occurs when lagged fourth-quarter-to-fourth-quarter growth rates are formed.
54. OLS + 1/T-3; see Peter Kennedy, A Guide to Econometrics, 2d ed. (Cambridge: MIT Press, 1985), 122. The regression results summarized in Tables 6 and 7 show that my qualitative conclusions are unaffected by the bias, noting that T equals 115.
55. Richard Clarida and Mark Gertler, "How the Bundesbank Conducts Monetary Policy," NBER Working Paper no. 5581 (May 1996).
56. Ibid; and see also Ben Bernanke and Frederic Mishkin, "Central Bank Behavior and the Strategy of Monetary Policy: Observations from Six Industrialized Countries," in Olivier J. Blanchard and Stanley Fischer, eds., NBER Macroeconomics Annual 1992 (Cambridge: MIT Press, 1992); Manfred J. M. Neumann and Jürgen von Hagen, "Germany," in Michelle U. Fratianni and Dominick Salvatore, eds., Monetary Policy in Developed Economies: Handbook of Comparative Economic Policies, vol. 3 (Westport, Conn.: Greenwood Press, 1993).
57. Ibid; and see also Ben Bernanke and Frederic Mishkin, "Central Bank Behavior and the Strategy of Monetary Policy: Observations from Six Industrialized Countries," in Olivier J. Blanchard and Stanley Fischer, eds., NBER Macroeconomics Annual 1992 (Cambridge: MIT Press, 1992); Manfred J. M. Neumann and Jürgen von Hagen, "Germany," in Michelle U. Fratianni and Dominick Salvatore, eds., Monetary Policy in Developed Economies: Handbook of Comparative Economic Policies, vol. 3 (Westport, Conn.: Greenwood Press, 1993).
58. Ibid; and see also Ben Bernanke and Frederic Mishkin, "Central Bank Behavior and the Strategy of Monetary Policy: Observations from Six Industrialized Countries," in Olivier J. Blanchard and Stanley Fischer, eds., NBER Macroeconomics Annual 1992 (Cambridge: MIT Press, 1992); Manfred J. M. Neumann and Jürgen von Hagen, "Germany," in Michelle U. Fratianni and Dominick Salvatore, eds., Monetary Policy in Developed Economies: Handbook of Comparative Economic Policies, vol. 3 (Westport, Conn.: Greenwood Press, 1993).
59. This specification of the preelection dummy variable is standard in the empirical literature on political business cycles. Given that money affects employment and output with a lag of several quarters, this specification is not, strictly speaking, consistent with the idea that preelection monetary surges are meant to stimulate the economy and thereby increase the government's reelection prospects. I conjecture that increases in the money supply prior to elections reflect electorally motivated decreases in "visible" interest rates. This variant on the Nordhaus hypothesis is more plausible empirically, but it remains to be developed theoretically. For further discussion, see Lohmann (fn. 16, 1997).
60. Berger and Woitek (fn. 6, 1997) also test and reject the Vaubel hypothesis.
61. Frey and Schneider (fn. 6); see also Kenneth A. Schultz, "The Politics of the Political Business Cycle," British Journal of Political Science 25 (January 1995).
62. Alberto Alesina and Howard Rosenthal, Partisan Politics, Divided Government, and the Economy (New York: Cambridge University Press, 1995); James E. Alt and Robert C. Lowry, "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States," American Political Science Review 88 (December 1994); James M. Poterba, "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy 102 (August 1994).
63. Alberto Alesina and Howard Rosenthal, Partisan Politics, Divided Government, and the Economy (New York: Cambridge University Press, 1995); James E. Alt and Robert C. Lowry, "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States," American Political Science Review 88 (December 1994); James M. Poterba, "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy 102 (August 1994).
64. Alberto Alesina and Howard Rosenthal, Partisan Politics, Divided Government, and the Economy (New York: Cambridge University Press, 1995); James E. Alt and Robert C. Lowry, "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States," American Political Science Review 88 (December 1994); James M. Poterba, "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy 102 (August 1994).
65. Mathew D. McCubbins, Roger G. Noll, and Barry R. Weingast, "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics, and Organization 3 (Fall 1987); David Epstein and Sharyn O'Halloran, Delegating Powers: A Transaction Cost Politics Approach to Policy Making (New York: Cambridge University Press, 1998); Susanne Lohmann and Sharyn O'Halloran, "Divided Government and U.S. Trade Policy," International Organization 49 (Autumn 1994).
66. Mathew D. McCubbins, Roger G. Noll, and Barry R. Weingast, "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics, and Organization 3 (Fall 1987); David Epstein and Sharyn O'Halloran, Delegating Powers: A Transaction Cost Politics Approach to Policy Making (New York: Cambridge University Press, 1998); Susanne Lohmann and Sharyn O'Halloran, "Divided Government and U.S. Trade Policy," International Organization 49 (Autumn 1994).
67. Mathew D. McCubbins, Roger G. Noll, and Barry R. Weingast, "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics, and Organization 3 (Fall 1987); David Epstein and Sharyn O'Halloran, Delegating Powers: A Transaction Cost Politics Approach to Policy Making (New York: Cambridge University Press, 1998); Susanne Lohmann and Sharyn O'Halloran, "Divided Government and U.S. Trade Policy," International Organization 49 (Autumn 1994).
68. Susanne Lohmann, "Why Do Central Banking Institutions Matter?" (Paper presented at the annual meeting of the American Political Science Association, San Francisco, September 1996).
69. James Forder, On the Assessment and Implementation of 'Institutional' Remedies," Oxford Economic Papers 48 (January 1996), 39.
70. Alex Cukierman, Central Bank Strategy, Credibility, and Independence: Theory and Evidence (Cambridge: MIT Press, 1992), 421.
71. Forder (fn. 41), 50.
72. Bennett T. McCallum, "Two Fallacies Concerning Central-Bank Independence," American Economic Review Papers and Proceedings 85 (May 1995); Lohmann (fn. 40); idem, "Reputational versus Institutional Solutions to the Time-Consistency Problem in Monetary Policy," in Sylvester C. W. Eijffinger and Harry Huizinga, eds., Positive Political Economy: Theory and Evidence (New York: Cambridge University Press, 1997).
73. Bennett T. McCallum, "Two Fallacies Concerning Central-Bank Independence," American Economic Review Papers and Proceedings 85 (May 1995); Lohmann (fn. 40); idem, "Reputational versus Institutional Solutions to the Time-Consistency Problem in Monetary Policy," in Sylvester C. W. Eijffinger and Harry Huizinga, eds., Positive Political Economy: Theory and Evidence (New York: Cambridge University Press, 1997).
74. Adam Posen, "Why Central Bank Independence Does Not Cause Low Inflation: There Is No Institutional Fix for Politics," in Richard O'Brien, ed., Finance and the International Economy, vol. 7 (Oxford: Oxford University Press, 1993); idem, "Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence," in Ben Bernanke and Julio Rotemberg, eds., NBER Macroeconomics Annual 1995 (Cambridge: MIT Press, 1995).
75. Adam Posen, "Why Central Bank Independence Does Not Cause Low Inflation: There Is No Institutional Fix for Politics," in Richard O'Brien, ed., Finance and the International Economy, vol. 7 (Oxford: Oxford University Press, 1993); idem, "Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence," in Ben Bernanke and Julio Rotemberg, eds., NBER Macroeconomics Annual 1995 (Cambridge: MIT Press, 1995).
76. Caesar (fn. 27).
77. Posen (fn. 45, 1993, 1995); see also C. Randall Henning, Currencies and Politics in the United States, Germany, and Japan (Washington, D.C.: Institute for International Economics, 1994).
78. Lohmann (fn. 2).
79. George Tsebelis, "Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism, and Multipartyism," British Journal of Political Science 25 (July 1995).
80. Banaian, Laney, and Willett, "Central Bank Independence: An International Comparison," in Eugenia Froedge Toma and Mark Toma, eds., Central Bankers, Bureaucratic Incentives, and Monetary Policy (Boston: Academic Publishers, 1986).
81. Peter Moser, "Checks and Balances and the Supply of Central Bank Independence," European Economic Review (forthcoming).
82. Sylvia Maxfield, Gatekeepers of Growth: The International Political Economy of Central Banking in Developing Countries (Princeton: Princeton University Press, 1997).