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A structuralist theory of central bank independence

Author

Listed:
  • Eduardo Zambrano

    (California Polytechnic State University)

Abstract

Can a heterodox economist find arguments in favor of Central Bank independence? Economists currently favor arguments in favor of Central Bank independence based on Barro-Gordon (1983 a,b), a very ‘orthodox' model. Consequently, those who view the economic orthodoxy with suspicion tend to question Central Bank independence. I argue that Central Bank independence can be beneficial even in a very ‘structuralist' economy: one in which workers are unionized, firms are cartelized and inflation arises as the result of distributive struggles among capitalists and workers. This is so because it is the time-inconsistency issue, and not the structure of the economy, that which generates the inflation bias that Central Bank independence is set to eliminate.

Suggested Citation

  • Eduardo Zambrano, 2014. "A structuralist theory of central bank independence," Economics Bulletin, AccessEcon, vol. 34(4), pages 2190-2200.
    • Handle: RePEc:ebl:ecbull:eb-14-00761
    as

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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches

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