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Central banks - independent or almighty?

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  • Issing, Otmar

Abstract

Historically Central Bank Independence (CBI) was anything but the norm. CBI seems to contradict core principles of democracy. Most economists were also against CBI. After the Great Inflation of the 1970ies many empirical studies demonstrated that there is a strong negative correlation between the degree of CBI and the rate of inflation. In 1990 most major countries had endowed their central bank with the status of independence. Overburdening with elevated expectations and additional competences are threatening the reputation of central banks and undermining the case for CBI.

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  • Issing, Otmar, 2021. "Central banks - independent or almighty?," SAFE Policy Letters 92, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safepl:92
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    References listed on IDEAS

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    1. Mr. Otmar Issing, 2011. "Lessons for Monetary Policy: What Should the Consensus Be?," IMF Working Papers 2011/097, International Monetary Fund.
    2. Masciandaro, Donato & Romelli, Davide, 2015. "Ups and downs of central bank independence from the Great Inflation to the Great Recession: theory, institutions and empirics," Financial History Review, Cambridge University Press, vol. 22(3), pages 259-289, December.
    3. Otmar Issing, 2011. "Lessons for monetary policy: what should the consensus be?," Globalization Institute Working Papers 81, Federal Reserve Bank of Dallas.
    4. Issing, Otmar, 2011. "Lessons for monetary policy: What should the consensus be?," CFS Working Paper Series 2011/13, Center for Financial Studies (CFS).
    5. Issing,Otmar, 2008. "The Birth of the Euro," Cambridge Books, Cambridge University Press, number 9780521731867.
    6. Issing,Otmar, 2008. "The Birth of the Euro," Cambridge Books, Cambridge University Press, number 9780521516730.
    7. Otmar Issing, 2005. "Why did the Great Inflation not happen in Germany?," Review, Federal Reserve Bank of St. Louis, vol. 87(Mar), pages 329-336.
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