Political Factors in Monetary Policy

Almost all observers agree that in some sense political factors matter in the conduct of monetary policy. There is much less agreement as to which political factors are most important, or as to exactly how those factors influence monetary policy. In this essay, I will advance a rudimentary typology of political factors that have been of interest to students of the conduct of economic policy. I will then examine in some detail the consequences of a subset of those factors for policy in three countries: Britain, France, and Germany. I conclude with a broader discussion of the importance of political factors and how they might be studied.