Central bank independence is controversial. It requires the delegation of powerful authority to a group of unelected officials. In a democracy, this anomaly naturally raises questions of legitimacy. It also raises fears of the concentration of power in the hands of a select few.…
Good starting point. They acknowledge the issue is a tradeoff between democracy and technocracy, and price stability and growth, liquidity and solvency.
A Primer on Central Bank Independence
Stephen G. Cecchetti, Professor of International Economics at the Brandeis International Business School, and Kermit L. Schoenholtz is Professor of Management Practice in the Department of Economics of New York University’s Leonard N. Stern School of Business
ht Mark Thoma at Economist's View
ht Mark Thoma at Economist's View
3 comments:
"When inflation rises, the central bank must promptly raise interest rates. And, should deflation threaten and the policy rate hit the zero bound, the central bank must respond by using its balance sheet flexibility. In this way, an independent central bank improves economic performance"
Bullshit.
Talking about shuffling interest rates when you have 5% of your productive capacity sat idle *as a matter of design* is the stupidest idea ever created.
The job of spending money and setting taxes is with the elected state. Central banks haven't 'followed through with their promises' either.
The Australian central bank has never been independent, also it has never been an issue.
The whole independence thing is a made up crock of shit.
The time inconsistency bullshit should be met with a Wray of light
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