International Conference on The Political Economy of Monetary Anchors The Leonard Davis Institute for International Relations

Dates: May 25–26, 2008
Location: Hebrew University of Jerusalem, Mt. Scopus, Jerusalem, Israel
Call for abstracts deadline: February 28, 2008

The conventional wisdom is that monetary anchors are institutional constraints on opportunistic government behavior that make it easier for governments to reduce inflation and maintain it at low levels. Monetary anchors are argued to be necessary because of the familiar time-consistency problem in market economies. According to this problem it may be rational in the short term for a government to abuse market agents’ trust, but it may nevertheless be rational for it in the long term to keep its promises.

Studies of monetary anchors have traditionally concentrated largely on two types of anchors: Permanently fixed exchange rates and independent central banks. However, scholars have also suggested alternative anchors such as inflation targeting, IMF policy conditionality, formal limits to fiscal deficits and high international capital mobility. Political economists have been studying domestic factors that explain exchange rate policy choices and the effectiveness of central bank independence. Such studies have focused mostly on the experience of the Euro-zone, the European Monetary System and Latin American countries.

However, questions remain: Can an incredible government win the public’s trust merely by declaring a new rule that it can change again at will? Are institutions not endogenous to domestic politics? Can external anchors become perverse sources of discipline? How do autocratic governments differ from democratic ones in terms of the choice of anchors? When would fixed exchange rates be better anchors than an independent central bank? How do temporary pegs compare with permanent fixes in this respect, and unilateral currency boards with multilateral currency unions? How do all of these institutions interact with different level of capital mobility and transparency?

Those interested in presenting a paper that answers these (or related) questions or challenges assertions made above should send abstracts of no more than 150 words along with their affiliation, position and contact details to: Tal Sadeh at davisinst@gmail.com. Participants interested in serving as chair or discussant should send their CVs. The conference website is at: http://davis.huji.ac.il/eng/activity.asp?cat=128&in=0 

We are happy to note that the following distinguished scholars have already confirmed their participation: Agnes Benassy, CEPII Paris, William Bernhard, University of Illinois at Urbana-Champaign, Mario Blejer, Bank of England, Lawrence Broz, University of California San Diego, William Roberts Clark, University of Michigan, Alex Cukierman, Tel Aviv University, Barry Eichengreen, University of California Berkley, Stanley Fischer, Bank of Israel, Jeffrey Frieden, Harvard University, Mark Hallerberg, Hertie School of Governance Berlin, David Howarth, University of Edinburgh, David Mayes, Bank of Finland and University of Auckland, Gerald Schneider, University of Konstanz, Nathan Sussman, Hebrew University of Jerusalem, Charles Wyplosz, Graduate Institute of International Studies Geneva.