Political Economy of the Central Bank of a Monetary Union: An Application to the Economic and Monetary Union.

Summary After an initial assessment of the institutional choices made in the framework of EMU in the light of the literature, we raise, in the second chapter, the macroeconomic and political specificities linked to the framework of a monetary union (asymmetry of shocks, heterogeneity of transmission channels, divergence of political preferences) and their possible implications. The third chapter highlights the efficiency and equity trade-offs underlying the definition of the decision-making process for the common monetary policy. Chapter four reconsiders the issue of delegating monetary policy to an independent central bank as proposed by Rogoff in the context of a monetary union. Chapter five extends this analysis to the case where the central bank must respect an inflation target set by the member countries. Finally, chapter six examines, under the assumption of partisan central bankers, the impact of two institutional choices available to currency-union members: the process of appointing central bankers and the political system of the union.