Monetary and fiscal institutional designs

Dimakou, Ourania

Abstract

Two investment decisions in economic institutions are feasible; investments in monetary institutions in the form of delegation of monetary policy to a more conservative or independent central bank, and investments in fiscal capacity, in the form of combating bureaucratic corruption and its consequent fiscal revenue leakages. Within this framework, we investigate the interactions among those two institutional decisions and the obtained institutional structure. The findings provide support of strategic complementarities; investments in monetary and fiscal institutions reinforce each other. In addition, we identify a set of determinants that impact on the government’s decisions to improve economic institutions, particularly, the structure and intensity of the initial corruption level, the amount of distortions caused by taxation and the policymaker’s goals and preferences across its objectives.

Citation

Dimakou, O. (2013). Monetary and fiscal institutional designs. Journal of Comparative Economics, 41(4), 1141-1166. https://doi.org/10.1016/j.jce.2013.02.001

• Journal Article Type: Article
• Publication Date: Jan 1, 2013
• Deposit Date: Apr 7, 2014
• Journal: Journal of Comparative Economics
• Print ISSN: 0147-5967
• Electronic ISSN: 1095-7227
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 41
• Issue: 4
• Pages: 1141-1166
• DOI: https://doi.org/10.1016/j.jce.2013.02.001
• Keywords: Monetary and fiscal policies; Corruption; Central bank reform; Strategic complementarties