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What is Policy Clustering
Adoption of policies is motivated by the observation that nation-states, or some other jurisdictional unit, choose similar institutions within a fairly circumscribed period of time. Such behaviour results in temporal and spatial clusters of policy reform. Why might such clustering occur? One conventional answer is that countries respond similarly, but independently, to similar domestic conditions.
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Inflationary Bias Another potential problem with the coordination of monetary policy is that it can worsen the inflationary bias within each country. If the costs associated wi
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