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Central Bank independence and policy coordination: advantages and disadvantages of two structures for stabilization

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  • Helder Ferreira de Mendonça

Abstract

Nowadays, the orthodox conventional wisdom believes that the adoption of an independent central bank improves the alignment of fiscal policy with monetary policy, and thus, increases the coordination between fiscal and monetary authorities. However, the idea of coordination cannot be reduced to this. This paper makes a brief analysis concerning the advantages and disadvantages that belong to the independence of the central bank proposition and coordination between monetary and fiscal policies. The findings denote that the coordination of policies is a better framework to achieve the several macroeconomic goals. JEL Classification: E52; E58; E61.

Suggested Citation

  • Helder Ferreira de Mendonça, 2003. "Central Bank independence and policy coordination: advantages and disadvantages of two structures for stabilization," Brazilian Journal of Political Economy, Center of Political Economy, vol. 23(1), pages 112-123.
    • Handle: RePEc:ekm:repojs:v:23:y:2003:i:1:p:112-123:id:891
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    More about this item

    Keywords

    Independence of central bank; coordination; macroeconomic policies;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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