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Independent central banks: some theoretical and empirical problems

Howells, Peter

Authors

Peter Howells



Abstract

In little more than twenty years, it has become widely accepted that the optimal design of monetary policy should include provision for a central bank that is independent of government influence. This is a remarkably short period of time for any idea in economics to become so widely-accepted. But there are problems.
In this paper we show that there are many confusions and even some contradictions associated with central bank independence. To begin with, it is not entirely clear what it is exactly that central banks need to be independent of. Furthermore, there is confusion over the mechanisms whereby independence is supposed to deliver its benefits. The literature which is commonly said to provide the rationale for independence is often misunderstood and the evidence that independence does in fact enhance policy outcomes is extremely weak.

Citation

Howells, P. (2009). Independent central banks: some theoretical and empirical problems

Journal Article Type Article
Publication Date Jan 1, 2009
Deposit Date Jan 5, 2011
Journal CLM Economia
Print ISSN 1695-9310
Peer Reviewed Peer Reviewed
Volume 14
Pages 177-204
Keywords monetary policy, central banks
Public URL https://uwe-repository.worktribe.com/output/1003211
Publisher URL http://www.clmeconomia.jccm.es/
Related Public URLs http://carecon.org.uk/DPs/0908.pdf




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