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The Politics of Independence and Bureaucracy: Approaching the Policy Making of the European Central Bank

Sebastian Heidebrecht

Central banking has been commonly assumed to perform best when left alone - independent especially from political influence. But current developments in monetary policy and central banking strengthened the fundamental position of central banks, highlighting the political dimensions of central banking and the strategic capacity of the institutions performing the tasks. However, governments and other principals still have possibilities to influence monetary policy, for instance through central banker selection, incentive setting and because of the intertwined character of unconventional monetary and fiscal policy. Especially in European Economic and Monetary Union, where the introduction of the Euro has transformed much of what used to be nominal into real sovereign debt, the political dimensions became crucial. Thus, exploring the new politics of European central banking is significantly interesting. By using a game theoretically inspired formalized European monetary game, the project shows on the one hand, which instruments and strategies national and European political actors can use. On the other hand, this approach permits the development of testable hypothesis, allowing for statistical testing using regression models within a mixed-methods research design. Data sources are publicly available data from public institutions (i.e. OECD, Eurostat), as well as an original data set on policy maker career paths and legal documents.



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