'Constrained discretion' in UK monetary and regional policy

Treasury claims that the notion of 'constrained discretion', which directs the effective operation of UK monetary policy, applies equally to other delegated and devolved policies, such as the use of Regional Development Agencies in the delivery of English regional policy. A 'transaction cost politics' perspective is used to argue that the delegation of responsibility for monetary stabilization raises principal agent issues quite different to those encountered in the delegation of the responsibility for regional regeneration. In particular, the effectiveness and transparency that characterize present-day monetary policy cannot be expected in regional policy. Further, the institutional arrangements that accompany the operation of Regional Development Agencies in England should be critically reviewed.