SFB 303 Discussion Paper No. B - 307
Author: Wesche, Katrin, and Jens Weidmann
Title: Central Bank Independence and Seigniorage: The Banque de France
Abstract: One prominent characteristic of independent central bank is the legal
limitation of the central bank's lending to the government. Although a
priori we expect a strong link between the legal restriction on central bank
credit to the government and seigniorage, the empirical cross-country
evidence in favour of this hypothesis is rather tenuous pointing to a poor
compliance to these restrictions. On balance, these cross-section studies
suggest that, though central bank independence is not a sufficient condition
to avoid excessive expansion of the monetary base, at best it can be
considered a necessary condition. In this paper we intend to supplement the
cross-section evidence through a case study of regime changes in a single
country. The case of France is particular interesting as the French monetary
system was highly administered until 1985 when radical reforms were
implemented. These events are reflected in the development of seigniorage
revenue.
Keywords: Central Bank Independence, Seigniorage, Banque de France
JEL-Classification-Number: E42, E58
Creation-Date: February 1995
Unfortunately this paper is not available online. Please contact us to order a hardcopy.
SFB 303 Homepage
30.06.1998, Webmaster