International evidence on the relationship between central banks and governments *

In this section, the methodology used in the preceding chapter is applied to four other major industrialized economies. In examining the experiences of Canada, France, the United Kingdom and West Germany over the same 1961:1–1983:4 sample period, the objective is to see whether monetary policy in these countries has evidenced an impact of government budget deficits of the type noted in the US case. At the same time, the prior findings by Hodgman and Resek (1983) and by Woolley (1983) of a significant impact of administration regime changes on the conduct of monetary policy across the Western European economies are reassessed in this new context.