There has been relatively little work applying the conflict inflation approach in different theoretical and historical settings. This book remedies this gap by treating private-sector distributional conflicts as well as government budgetary pressures on the money supply and the price level. Attention is drawn to the costs of non-accommodative policies in a conflict setting - and to the additional difficulties of non-accommodation likely associated with the use of exchange rate pegging as a disinflation device.

This book provides an in-depth description and analysis of monetary policy in Europe and the United States. Focusing specifically on the European Central Bank, it offers one of the first comprehensive guides to understanding the targets, strategy, and instruments of the ECB.

Political Economy of the Swiss National Bank examines whether there exists any systematic political influence on Swiss monetary policy. A partial adjustment model is used to derive the reaction functions. Models of political business cycles and the theory of legislative control are for the first time applied to the Swiss institutional setting. The inflationary performance of the National Bank is not explained with the legal relationship between the executive branch of government and the central bank. It is interpreted as the result of the structure of the executive (commission government) and the characteristics of the Swiss political market for monetary policy. In empirical tests no indirect political influence, defined as a systematic relationship between fiscal and monetary policy, and no direct political influence from elections, the executive and the legislature can be detected.

BURTON G. MALKIEL Chemical Bank Chairman's Professor of Economics Princeton University Central bankers have often believed that they are the Rodney Dangerfields of public officials-they seldom receive respect from the public or from elected officials. Particularly in the days of high infla tion and substantial unemployment, they were held responsible for everything that ailed the world's economies. And monetarists often suggested that nations would be far better off if central bankers were replaced by robots who would do nothing more than ensure that the money supply was increased at a fixed percent each year. Our views have changed considerably over the past two decades. The main reason is that, thanks in substantial part to the efforts of central bankers, inflation has generally been contained. With the re duction in inflation and the recent relative stability of price levels in most developed nations, risk premiums have tended to decline sharply. Moreover, unemployment rates, at least in the Western Hemisphere, have decreased substantially. Finally, even many economists who con sider themselves monetarists now tend to be less certain of the stabil ity of the link between the money supply and economic activity. Thus, there is greater appreciation of the critical role of judgment in the conduct of monetary policy and a general belief that the judgments central bankers have made have generally been sound.

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