-
-
The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
Do you have a request for information and records? Learn how to submit it.
Learn about the history of the New York Fed and central banking in the United States through articles, speeches, photos and video.
-
-
-
The Governance & Culture Reform hub is designed to foster discussion about corporate governance and the reform of culture and behavior in the financial services industry.
Need to file a report with the New York Fed? Here are all of the forms, instructions and other information related to regulatory and statistical reporting in one spot.
The New York Fed works to protect consumers as well as provides information and resources on how to avoid and report specific scams.
-
-
-
The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
The growing role of nonbank financial institutions, or NBFIs, in U.S. financial markets is a transformational trend with implications for monetary policy and financial stability.
The New York Fed offers the Central Banking Seminar and several specialized courses for central bankers and financial supervisors.
-
-
| Previous title: “The Politics of Central Bank Independence: A Theory of Pandering and Learning in Government” |
| March 2005 Number 205 Revised November 2006 |
| JEL classification: E58, E61, H11, J45 |
|
Authors: Gauti Eggertsson and Eric Le Borgne We propose a theory to explain why, and under what circumstances, a politician delegates policy tasks to a technocrat in an independent institution, and analyze under what conditions delegation is optimal for society. Our theory builds on Holmström's hidden effort principal-agent model. The election pressures faced by politicians, together with the absence of such pressures for technocrats, give rise to a dynamic incentive structure that formalizes two rationales for delegation, one advanced in the eighteenth century by Alexander Hamilton and the other in a 1998 work by Blinder. Delegation trades off the cost of having a possibly incompetent technocrat with a long-term job contract against the benefit of having a technocrat who (i) invests more effort into the specialized policy task and (ii) is better insulated from shifts in public opinion. A natural application of our framework leads to a new theory of central bank independence. |
||
|
34 pages / 401 kb
