The financial unravelling of the past three years has cast doubt on some certainties of orthodox economics. Central-bank independence is one. Before 2008, the idea that central banks should be shielded from politics, given an anti-inflation mandate, then left to run monetary policy as they saw fit was little doubted -- by economists, anyway. In 2010 this looks neither desirable nor even possible. Governments and central banks would rather avoid a proper discussion of this sensitive subject. But in the light of all that has happened, whether central banks should be above politics is a question that needs a fundamental rethink.
As I like to say, reality demands nothing less. But that has never stopped economists before.
. . . whether central banks should be above politics is a question that needs a fundamental rethink. What was the question I need to rethink? Sheilding central banks from politics? Giving an anti-inflation mandate? Running monetary policy as central bankers see fit?
ReplyDeleteThe idea of independent central banks is a false dichotomy.
ReplyDeleteBut is it by charles davis?
ReplyDelete