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Independent Utility Regulators: Lessons from Monetary Policy

Levine, P, Levine, P, Stern, J and Trillas, F Independent Utility Regulators: Lessons from Monetary Policy .

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Abstract

This paper explores the similarity of the underlying economic problems that lead to the establishment of (a) independent central banks to operate national monetary policies and (b) independent regulatory agencies for telecommunications and other utility service industries. We show that, in both cases, the adoption of agencies inde- pendent of government results from the need to achieve credibility and a reputation for economically sound long-run behaviour while preserving signi¯cant discretion to handle unanticipated events. We show that this solution is superior to policy rules that are ¯xed in advance. Both for central banks and regulatory agencies, what is re- quired are institutions that provide limited and accountable discretion within a clear policy framework, for example via high levels of accountability and transparency in their decision making processes. On the basis of a review of the empirical literature, we argue that central banks with superior governance arrangements, particularly on accountability and transparency, out-perform those with inferior arrangements and we discuss how this work might be extended to utility regulatory agencies.

Item Type: Other
Authors :
NameEmailORCID
Levine, Pp.levine@surrey.ac.ukUNSPECIFIED
Levine, Pp.levine@surrey.ac.ukUNSPECIFIED
Stern, JUNSPECIFIEDUNSPECIFIED
Trillas, FUNSPECIFIEDUNSPECIFIED
Uncontrolled Keywords : C72, E61, L51, Monetary policy, credibility, regulation, under-investment, delegation.
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:14
Last Modified : 17 May 2017 14:33
URI: http://epubs.surrey.ac.uk/id/eprint/818175

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