01669cas a2200253 a 4500 AALejournalIMF002493 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451856460 1018-5941 BD-DhAAL BD-DhAAL Eggertsson, Gauti. A Political Agency Theory of Central Bank Independence / Gauti Eggertsson, Eric Le Borgne. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (44 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We propose a theory to explain why, and under what circumstances, a politician gives up rent and delegates policy tasks to an independent agency. We apply this theory to monetary policy by extending a standard dynamic "New-Keynesian" stochastic general equilibrium model. This model gives a new theory of central bank independence that is unrelated to the standard inflation bias problem. We derive several new predictions and show that they are consistent with the data. Finally, we show that while instrument independence of the central bank is desirable, goal independence is not. Mode of access: Internet Le Borgne, Eric. IMF Working Papers; Working Paper ; No. 2003/144 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/144/001.2003.issue-144-en.xml IMF e-Library