IMF Working Papers

The Effectiveness of Macroeconomic Commitment in Weak(er) Institutional Environments

By Marc G Quintyn, Sophia Gollwitzer

August 1, 2010

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Marc G Quintyn, and Sophia Gollwitzer. The Effectiveness of Macroeconomic Commitment in Weak(er) Institutional Environments, (USA: International Monetary Fund, 2010) accessed December 30, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the institutional conditions affecting the establishment and effectiveness of independent central banks and of budgetary institutions. It draws on the recent theory developed by North, Wallis and Weingast on the transition from a closed and fragile state to an open economic and political environment. The paper presents a composite indicator allowing for the identification of a country’s position along this transition path. The findings suggest that (i) while the establishment of autonomous central banks seems to be relatively independent from the broader institutional framework, sound budgetary institutions tend to be established in countries with higher levels of rule of law for the elites, and (ii) while central bank independence is effective in reducing inflation irrespective of a country’s position along the transition path, budget institutions seem to be most effective as a disciplining device in weak institutional environments.

Subject: Budget planning and preparation, Inflation, Institutional arrangements for revenue administration, Legal support in revenue administration, Prices, Public debt, Public financial management (PFM), Revenue administration

Keywords: Armed forces, Budget planning and preparation, Budgetary Institutions, CBI index, Central Bank Independence, Country example, Country ranking, Country's government, Doorstep condition, Europe, Government action, Income level, Inflation, Institutional arrangements for revenue administration, Legal support in revenue administration, Macroeconomic Commitment Institutions, Political system, Political-Economic Institutions, Position vis-à-vis, Units weak, WP

Publication Details

  • Pages:

    59

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2010/193

  • Stock No:

    WPIEA2010193

  • ISBN:

    9781455205233

  • ISSN:

    1018-5941

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