Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union PDF
Preview Varieties of Monetary Reforms: Lessons and Experiences on the Road to Monetary Union
VARIETIES OF MONETARY REFORMS: Lessons and Experiences on the Road to Monetary Union VARIETIES OF MONETARY REFORMS: Lessons and Experiences on the Road to Monetary Union Edited by Pierre L. Siklos Wilfrid Laurier University W aterloo, Ontario .... " Springer Science+Business Media, LLC Library of Congress Cataloging-in-Publication Data Varieties of monetary reforms: lessons and experiences on the road to monetary unionl edited by Pierre L. Siklos. p. cm. Inc1udes bibliographical references and index. ISBN 978-1-4613-6172-5 ISBN 978-1-4615-2720-6 (eBook) DOI 10.1007/978-1-4615-2720-6 1. Monetary policy--Europe--Case studies--Congresses. 2. Monetary policy--United States--Congresses. 3. Monetary unions--Europe--Congresses. 4. Banks and banking, Central--Europe--Congresses. 5. Federal reserve banks- Congresses. 6. Foreign exchange rates--Congresses. 1. Siklos, Pierre L., 1955- HG930.5.V37 1994 332.4'6--dc20 94-13036 CIP Copyright @ 1994 by Springer Science+Business Media New York Originally published by Kluwer Academic Publishers, New York in 1994 Softcover reprint of the hardcover Ist edition 1994 AlI rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, LLC. Printed on acid-free pap er. CONTENTS CHAPTER PART I - SURVEYS PAGE "Varieties ofMonetary Reforms" Pierre L. Siklos 2 "Optimal Currency Areas: A Fresh Look at the Traditional Criteria" 23 Paul R. Masson, Mark P. Taylor PART II - EXCHANGE RATE MANAGEMENT 3 "Exchange Rate Pegging as a Disinflation Strategy: Evidence from the European 45 Monetary System" Richard C.K. Burdekin, Jilleen R. Westbrook, Thomas D. Willett 4 "How Much to Commit to an Exchange Rate Rule: Balancing Credibility and Flexibility" 73 Alex Cukierman, Miguel A. Kiguel, Nissan Liviatan PART III - CENTRAL BANK INDEPENDENCE 5 "Central Bank Dependence and Inflation Performance: AnExploratoryDataAnalysis" 95 Forrest H. Capie, Terrence C. Mills, Geoffrey E. Wood 6 "Political Effects on Central Bank Behaviour: Some International Evidence" 133 David R. Johnson, Pierre L. Siklos 7 "Reputation, CentralBankIndependence and the ECB" 165 Michele Fratianni, Haizhou Huang 8 "An Institutional Analysis ofthe Proposed European Central BankwithComparisons to the U.S. Federal Reserve System" 193 Nathaniel Beck CONTENTS PART IV - COUNTRY STUDIES 9 "Monetary Union and Monetary Policy: A Review ofthe German Monetary Union" 219 Jiirgen von Hagen 10 "Designing a Central Bank in a Federal System: The Deutsche Bundesbank, 1957 1992" 247 Susanne Lohmann 11 "Rules, Discretion, and Central Bank Independence: The German Experience, 1880-1989" 279 Bernhard Eschweiler, Michael D. Bordo 12 "The Origins ofthe Monetary Union in the United States" Arthur J Rolnick, Bruce D. Smith, Warren 323 E. Weber 13 "On the Coyne-Rasminsky Directive and Responsibility for Monetary Policy in Canada" 351 Thomas K. Rymes 14 "Crippled Monetary Policy in Transforming Economies: Why Central Bank Independence Does Not Restore Control" 367 IstwinAbel, John P. Bonin, Pierre L. Siklos INDEX 556 CONTRIBUTORS (in alphabetical order) Istvan Abel Nathaniel Beck BudapestBank Rt. DepartmentofPolitical Science BudapestV., Alkotmany u.3. University ofCalifornia, San Diego Postacim: 1852, LaJolla, California Hungary USA 92093 John P. Bonin Michael D. Bordo DepartmentofEconomics Department ofEconomics Wesleyan University Rutgers University Middletown, CT New Brunswick, NJ USA 06459 USA 08903 Richard C. K. Burdekin Forrest H. Capie ClaremontMcKennaCollege City University Business School 850ColumbiaAvenue Department ofBanking and Finance Claremont, California FrobisherCrescent, Barbican Centre USA 91711 London,UnitedKingdom EC2Y8HB Alex Cukierman Bernhard Eschweiler Department ofEconomics Head ofEconomic Resemch Tel Aviv University J.P. Morgan GmbH Ramat Aviv, P.O.B. 39040 Mainzerlandstr. 46, 6000 Frankfurt, 69978Tel Aviv, Isreal Germany Michele Fratianni Haizhou Huang IndianaUniversity IndianaUniversity, Graduate School ofBusiness Gmduate School ofBusiness Bloomington, IN Bloomington, IN USA 47405 USA 47405 David R. Johnson Miguel A. Kiguel Department ofEconomics The World Bank WilfridLaurier University 1818 H StreetN.W. Waterloo, Ontario Washington. D.C. Canada N2L 3C5 USA 20433 Nissan Liviatan Susanne Lohmann The World Bank Department ofPolitical Science 1818 H Street N.W. University ofCalifornia, Los Angeles Washington, D.C. Los Angeles, California USA 20483 USA 94305-5015 Paul R. Masson Terrence C. Mills Research Department DeanoftheSchoolofEconomicStudies International Monetary Fund The University ofHull Washington, D.C. Hull, USA 20431 United Kingdom HU6 7RX Arthur J. Rolnick Thomas K. Rymes Research Department Department ofEconomics FederalReserve BankofMinneapolis Carleton University 250 Marquette Avenue 1125 Colonel By Drive Minneapolis, Minnesota Ottawa, Ontario USA 55401-0291 Canada KIS 5B6 Pierre L. Siklos Bruce D. Smith DepartmentofEconomics Department ofEconomics WilfridLaurier University Cornell University Waterloo, Ontario Ithaca, New York Canada N2L 3C5 USA 14850 Mark P. Taylor Jiirgen von Hagen Research Department Lehrstuhl fUr VWL VI International Monetary Fund University ofMannheim Washington, D.C. Seminargebaude A5 D-6800, USA 20431 Mannheim I Germany Warren W. Weber Jilleen R. Westbrook Research Department Department ofEconomics Federal Reserve BankofMinneapolis TempleUniversity 250 Marquette Avenue Philadelphia, Pennsylvania Minneapolis, Minnesota USA 19122 USA 55401-0291 Thomas D. Willett Geoffrey E. Wood Horton ProfessorofEconomics CityUniversity Business School Claremont Graduate School Department ofBanking and Finance and Claremont-McKennaCollege FrobisherCrescent 500E. 9th Street Barbican Centre Claremont, California London USA 91711 United Kingdon EC2Y 8HB REFEREES Peter Bernholz University ofBasel Michael D. Bordo Rutgers University John F. Boschen TheCollege ofWilliam and Mary Richard C. K. Burdekin ClaremontGraduate School a Pierre Fortin Universite du Quebec Montreal Rik W. Hafer Southern Illinois University at Edwardsville Edouard Hochreiter Austrian National Bank Carl-Ludwig Holtfrerich Freie Universitlit Berlin David R. Johnson Wilfrid Laurier University Miguel A. Kiguel World Bank Leroy D. Laney First Hawaiian Bank Susanne Lohmann University ofCalifornia,Los Angeles Thomas K. Rymes Carleton University Pierre Siklos Wilfrid LaurierUniversity Jiirgen von Hagen University ofMannheim Carl E. Walsh University ofCalifornia, Santa Cruz Steven B. Webb World Bank Thomas D. WIllett ClaremontGraduate School Mark E. Wohar University ofNebraskaatOmaha PREFACE Theideatoedita volumeon monetary reformsbeganwhen Iwasavisiting scholar at the University ofCalifornia, San Diego in 1991. Kluwer's editor at the time, Mr. David McConnell, suggested that the imminentarrival ofEurope 1992as well as negotiations over what wouldbecalled the MaastrichtTreaty might make it interestingtocompileabookaboutcentralbankindependence.Iwasreluctanttoedit abookonsuchatopicbecausesomanyhadalreadydealtwiththeissuefrom several perspectivesbutalsobecauseIfeltthatsuchanapproach woulddisguisethefact that experienceswith monetary reforms werevariedand notrestrictedsolely toquestions about central bank independence the subjectofso much discussion stemming from plans for aEuropeanCentralBank. Asa result, Isuggested thata bookdealing with varieties ofmonetary reforms would bring a fresh perspective amid the plethora of separate volumes about monetary union, exchange rate arrangements and optimum currency areas. Hence the title for this volume. I was also determined, however, to attract case studies to buttress some of the theoretical and applied arguments also presented in this volume. The reason is that case studies offer the opportunity to consider the historical and institutional aspects of the menu of monetary reforms available to policy makers. Second, individual country studies reveal that policy constraintsalsodifferacrosscountriesandhencehelpexplainthevarietyofmonetary reforms. I only hope that the right "mix" ofpapers was generated. ManyofthepapersinthisvolumewerepresentedattwoConferencesduring thecourseof1992.AspecialEconomicInquirysessionwasorganizedattheWestern Economic Association International (WEIA) Conference in San Francisco in July 1992. A second Conference on the Political Economy of Global Monetary StabilizationattheClaremontGraduateSchoolinOctober1992.lowespecialthanks toTomWillettand thestaffattheClaremontGraduateSchoolwho wereresponsible for organizing the wonderful Claremont Conference. Tom also had a hand in organizing the WEIA session. I am also grateful to the discussants at the two conferences as well as the referees who were kind enough to provide me with comments which ultimately improved every papercontained in this volume. The time necessary to editthe volume and commenton every paperwould not have been possible without grants from the Research Office ofWilfrid Laurier University as well as the Vice-President Academic's Academic Development Fund which provided me with the release time during the Fall of 1992 to complete much of the editing for this volume and to write my own contributions to the volume. Cindi Wieg as well as Elsie Grogan and the word processing staff ensured that communications with all the authors went on smoothly and efficiently as well as helping process myown manuscripts.
The list of books you might like
