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Defusing Democracy

Central Bank Autonomy and the Transition from Authoritarian Rule

Delia M. Boylan

Publication Year: 2001

Many of today's new democracies are constrained by institutional forms designed by previous authoritarian rulers. In this timely and provocative study, Delia M. Boylan traces the emergence of these vestigial governance structures to strategic behavior by outgoing elites seeking to protect their interests from the vicissitudes of democratic rule. One important outgrowth of this political insulation strategy--and the empirical centerpiece of Boylan's analysis--is the existence of new, highly independent central banks in countries throughout the developing world. This represents a striking transformation, for not only does central bank autonomy remove a key aspect of economic decision making from democratic control; in practice it has also kept many of the would-be expansionist governments that hold power today from overturning the neoliberal policies favored by authoritarian predecessors. To illustrate these points, Defusing Democracy takes a fresh look at two transitional polities in Latin America--Chile and Mexico--where variation in the proximity of the democratic "threat" correspondingly yielded different levels of central bank autonomy. Boylan concludes by extending her analysis to institutional contexts beyond Latin America and to insulation strategies other than central bank autonomy. Defusing Democracy will be of interest to anyone--political scientists, economists, and policymakers alike--concerned about the genesis and consolidation of democracy around the globe. Delia M. Boylan is Assistant Professor, Harris Graduate School of Public Policy Studies, University of Chicago.

Published by: University of Michigan Press

List of Tables and Figures

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pp. ix-x

Acknowledgments

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pp. xi-

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1. Introduction: The Challenge of Democratic Consolidation

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pp. 1-19

The tide of countries making the transition from authoritarian rule in the late 1980s and early 1990s was initially greeted with euphoria. It was taken as a hopeful sign that the post–cold war era would be characterized by a community of nations—developed and developing alike—with a commitment to democratic institutions and democratic values (Fukuyama 1991). ...

Part 1: Theory

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2. Central Bank Autonomy: A Redistributive Perspective

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pp. 23-40

The introductory chapter laid out the general contours of this book. The general theme is one of institutional autonomy as a form of political insulation. The setting is democracies in transition from authoritarian rule. And the specific institutional form in question is central bank autonomy. ...

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3. Preemptive Strike: Central Bank Autonomy in the Transition from Authoritarian Rule

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pp. 41-72

The previous chapter provided an extensive discussion of current thinking on central banks in the advanced industrial democracies. To date, the conventional wisdom has posited autonomous central banks as structures of mutual advantage and efficiency. ...

Part 2: Empirics

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4. Authoritarians under Siege: Chile’s Democratic Rebirth

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pp. 75-107

For anyone well versed in Chile’s much-heralded transition from authoritarian rule in 1989, the allegation that this was a well-insulated transition will hardly come as a surprise. Such insulation was in many respects the hallmark feature of this country’s political changing of the guard (Valenzuela 1992; Arriagada and Graham 1994). ...

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5. Imminent Threat, Ironclad Response: The 1989 Chilean Central Bank Reform

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pp. 108-138

The previous chapter established the motive for Chile’s 1989 central bank reform. Following the outcome of the 1988 plebiscite, the authoritarian regime and its powerful economic constituencies confronted a political future in which they would no longer be in charge. ...

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6. Technocracy under Threat: Mexico’s Democratic Awakening

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pp. 139-168

The previous chapter presented the Chilean central bank reform of 1989 as a strong case of institutional insulation in the transition from authoritarian rule. Faced with an impending regime change under the helm of the center left, conservative authoritarian elites insulated monetary policy against the threat of an interventionist future. ...

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7. Ambiguous Threat, Ambivalent Response: The 1993 Mexican Central Bank Reform

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pp. 169-221

The 1988 national elections demonstrated the extent of dissatisfaction with Mexico’s ruling party and its neoliberal reform agenda. In particular, they pointed to the rise of a center-left movement with the potential to threaten the electoral hegemony of the PRI. As with Chile, we appeared to be witnessing the prelude to a decisive insulation response. ...

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8. Central Bank Reform in Comparative Perspective

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pp. 222-237

As noted in chapter 1, regime change is not the only impetus for central bank autonomy in the developing world. There is no question, for example, that the external credibility logic that Maxfield (1997) and others highlight also plays a central role in a number of recent cases. ...

Part 3: Conclusions

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9. Democratic Consolidation and Institutional Theory: Broadening the Debate

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pp. 241-256

This book has sought to elucidate the pivotal role of institutional insulation in countries undergoing the transition from authoritarian rule. I have argued that once they know the writing is on the wall, authoritarian governments on the brink of losing power give democracy away with one hand while taking it back with the other. ...

References

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pp. 257-287

Index

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pp. 289-295


E-ISBN-13: 9780472026838
E-ISBN-10: 0472026836
Print-ISBN-13: 9780472112142
Print-ISBN-10: 0472112147

Page Count: 312
Illustrations: 7 drawings, 13 tables
Publication Year: 2001

Research Areas

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Subject Headings

  • Democratization -- Chile.
  • Banks and banking, Central -- Political aspects -- Mexico.
  • Banks and banking, Central -- Political aspects.
  • Democratization.
  • Banks and banking, Central -- Political aspects -- Chile.
  • Democratization -- Mexico.
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