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The Search for Autonomy: Governments, Central Banks, and the Formation of Monetary Preferences

GPS, Vol. 4 No. 3, (2008)

This article contributes to the literature on the fundamental
preferences of governments and central banks in
international monetary policy. Based on archival sources,
the paper analyses the dynamics of the relations between the
German government and its central bank, the Bundesbank,
during the 1950s and 1960s. The core argument is that
geopolitical factors, such as the imperatives of the
transatlantic alliance or European integration, can be used
strategically by governments to constrain the autonomy of
nominally independent central banks. The argument is
applicable across a large set of countries in which
governments and independent central banks co-decide
fundamental monetary preferences.

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