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Constitutional Political Economy

, Volume 25, Issue 3, pp 280–300 | Cite as

Is there a self-enforcing monetary constitution?

  • Alexander William Salter
Original Paper

Abstract

A self-enforcing monetary constitution has rules that agents acting within the system will uphold even in the presence of deviations from ideal knowledge and complete benevolence. It thus does not require external enforcement. What would such a constitution look like? I show that two regimes—a version of nominal gross domestic product targeting that relies on market implementation of monetary policy, and free banking—meet these requirements for self-enforcing monetary constitutions. The analysis draws insights from political economy, and from constitutional political economy in particular.

Keywords

Central banking Constitutional political economy Free banking Monetary constitution NGDP targeting Robust political economy 

JEL Classification

B53 E42 E52 P16 

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsGeorge Mason UniversityFairfaxUSA

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