Description: This research proposes that monetary policy is more than a technical economic policy. Since it is politically controlled, political variables should affect it. In this analysis, the monetary policies of France, Italy, the United Kingdom, and West Germany are described in detail. Political variables potentially affecting this policy are reviewed. Political variables, such as political party in power, electoral competition, electoral cycles, and political instability, are employed in a time series regression analysis of monetary aggregates. Various economic variables are also included to aid model specification. While cross-national variations occur in monetary policy determination, this research shows that political parties follow ideologies in monetary policy-making. Other political variables are not strongly related to monetary aggregates.
Date: December 1981
Creator: Williams, John Taylor