POLITICAL-ECONOMY OF CENTRAL BANKS

Current developments in the field of comparative political economy have emphasised the role and influence of corporatist institutions in the determination of levels of economic and social performance. Without denying the importance of corporatism, the paper argues for the need to acknowledge and examine the impact of other institutions, such as central banks, on economic performance. Given the increasing role of monetary policy in fashioning economic development, central banks have assumed a key economic and political role in policy formation. Against this background, the paper explores the theoretical and empirical implications of central bank independence, and suggests that a greater emphasis should be placed on the nature and type of central bank independence and on the institutional linkages between central banks and other state institutions.