Abstract

By examining the relationship between democratic governance and monetary
authority this paper accomplishes two principal tasks. First, it justifies placing the study of
monetary authority as a central item on the research agenda of political scientists. Beginning
from the premise central banks constitute a special mode of political authority, we examine
trade-offs between questions of transparency, democratic accountability, and public sector
efficiency. Second, by conducting an empirical study of monetary authority for the Brazilian
case, the paper inverts a commonly held assumption within the study of central banks. Rather
than argue price stability follows from an autonomous central bank, the Brazilian case
demonstrate nearly the opposite can take place.

JEL Classification: E58.