Political Economy and Comparative Central Banking

This paper introduces a Marx-Keynes-Kalecki model of the political economy of comparative central banking which suggests that monetary policy is determined by four key factors: capital-labor relations; industry-finance relations; the degree of central bank independence; and the position of the economy in the world economy. The paper presents econometric evidence suggesting that large OECD countries that have more independent central banks, more speculative financial markets, and more conflictual capital-labor relations, have lower rates of capacity utilization. This evidence is consistent with the model's predictions about the relationship between political-economic structure and central bank policy.