Gersl, A: Economics and Politics of Macroeconomic Policies

The book concentrates on macroeconomic policies from both economic and political economy perspective. The first two chapters take a pure economic perspective and analyze foreign exchange interventions pursued by the Czech National Bank in the 2001-2002 appreciation bubble period. Third chapter reviews the literature on dynamic inconsistency of monetary policy and discusses alternative proposals to limit the incentives of policymakers to use monetary policy to maximize their political support function. Fourth chapter empirically measures the political pressure on the Czech central bank and tests whether such pressure influences monetary policy. Fifth chapter discusses the concept of central bank independence from the constitutional economics perspective. Finally, sixth chapter uses a dynamic inconsistency model to assess three alternative proposals how to reform fiscal constitution in order to limit government s incentive to use fiscal policy for maximizing political support.