IDEAS home Printed from https://ideas.repec.org/a/fan/steste/vhtml10.3280-ste2016-118012.html
   My bibliography  Save this article

Keynes on Central Bank Independence

Author

Listed:
  • Carlo Panico
  • Marco Piccioni

Abstract

The article examines Keynes?views on central bank independence (CBI), focussing on an essay he published in 1932. After distinguishing the several forms of CBI, we argue that Keynes only favoured some of them, avoiding impairing the role that political institutions must play in deciding the objectives of monetary policy. We assess Keynes?views against the background of the crucial transformations that the Bank of England underwent after WWI and of the Labour Party debates on the integration between CBI and the functioning of democracy. Keynes maintained that CBI must protect monetary policy decisions from the pressures coming from both private and political groups; and added that the separation of competence among elected and non-elected bodies must be supplemented by large communication with the society and by cooperation and coordination among public institutions. Finally, we highlight that Keynes?proposals are relevant for present debates.

Suggested Citation

  • Carlo Panico & Marco Piccioni, 2016. "Keynes on Central Bank Independence," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2016(118-119-1), pages 190-216.
  • Handle: RePEc:fan:steste:v:html10.3280/ste2016-118012
    as

    Download full text from publisher

    File URL: http://www.francoangeli.it/riviste/Scheda_Rivista.aspx?IDArticolo=59933&Tipo=ArticoloPDF
    Download Restriction: Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Keynes, John Maynard, 1919. "The Economic Consequences of the Peace," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number keynes1919.
    2. Moggridge, D E, 1992. "The," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 207-209, Summer.
    3. Philip Arestis & Eckhard Hein & Edwin Le Héron, 2007. "Aspects of Modern Monetary and Macroeconomic Policies," Post-Print halshs-00155170, HAL.
    4. Daniele Besomi (ed.), 2003. "The Collected Interwar Papers and Correspondence of Roy Harrod," Books, Edward Elgar Publishing, volume 0, number 3068.
    5. Malcolm Sawyer, 2006. "Inflation targeting and central bank independence: we are all Keynesians now! or are we?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 28(4), pages 639-652.
    6. Helge Berger & Jakob De Haan & Sylvester C.W. Eijffinger, 2001. "Central Bank Independence: An Update of Theory and Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 15(1), pages 3-40, February.
    7. J. De Haan & W. Kooi, 1997. "What really matters: conservativeness or independence?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 50(200), pages 23-38.
    8. Edwin Le Héron, 2007. "The New Governance in Monetary Policy: A Critical Appraisal of the Fed and the ECB," Post-Print halshs-00155173, HAL.
    9. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
    10. Edwin Heron, 2007. "The New Governance in Monetary Policy: A Critical Appraisal of the Fed and the ECB," Palgrave Macmillan Books, in: Philip Arestis & Eckhard Hein & Edwin Heron (ed.), Aspects of Modern Monetary and Macroeconomic Policies, chapter 9, pages 146-171, Palgrave Macmillan.
    11. Philip Arestis & Eckhard Hein & Edwin Le Heron (ed.), 2007. "Aspects of Modern Monetary and Macroeconomic Policies," Conference proceedings of the Research Network Macroeconomics and Macroeconomic Policies (FMM), IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute, number 9b-2007, June.
    12. Philip Arestis, 2006. "New Monetary Policy and Keynes," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 3(2), pages 245-262.
    13. Jorg Bibow, 2010. "A Post Keynesian Perspective on the Rise of Central Bank Independence: A Dubious Success Story in Monetary Economics," Economics Working Paper Archive wp_625, Levy Economics Institute.
    14. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," The World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-398, September.
    15. Sylvester Eijffinger (ed.), 1997. "Independent central banks and economic performance," Books, Edward Elgar Publishing, number 1143.
    16. de Haan, Jakob, 1997. "The European Central Bank: Independence, Accountability and Strategy: A Review," Public Choice, Springer, vol. 93(3-4), pages 395-426, December.
    17. Carlo Panico & V?zquez Su?rez Marta, 2008. "Policy Coordination in the Euro Area," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2008(96), pages 5-31.
    18. Jörg Bibow, 2002. "Keynes on Central Banking and the Structure of Monetary Policy," History of Political Economy, Duke University Press, vol. 34(4), pages 749-787, Winter.
    19. Philip Arestis & Eckhard Hein & Edwin Heron (ed.), 2007. "Aspects of Modern Monetary and Macroeconomic Policies," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-62734-5, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Angel Asensio, 2007. "Inflation targeting drawbacks in the absence of a 'natural' anchor," Post-Print halshs-00189225, HAL.
    2. Angel Asensio, 2009. "Between the cup and the lip," Working Papers halshs-00496911, HAL.
    3. Eckhard Hein & Daniel Detzer, 2015. "Finance-Dominated Capitalism and Income Distribution: A Kaleckian Perspective on the Case of Germany," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(2), pages 171-191, July.
    4. Masciandaro, Donato, 2022. "Independence, conservatism, and beyond: Monetary policy, central bank governance and central banker preferences (1981–2021)," Journal of International Money and Finance, Elsevier, vol. 122(C).
    5. repec:ilo:ilowps:484519 is not listed on IDEAS
    6. Eckhard Hein & Achim Truger, 2012. "Finance-dominated capitalism in crisis—the case for a global Keynesian New Deal," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(2), pages 187-213.
    7. Angel Asensio, 2009. "Between the cup and the lip," CEPN Working Papers halshs-00496911, HAL.
    8. Eckhard Hein, 2013. "The crisis of finance-dominated capitalism in the euro area, deficiencies in the economic policy architecture, and deflationary stagnation policies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(2), pages 325-354.
    9. 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.
    10. Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective," MPRA Paper 35903, University Library of Munich, Germany.
    11. Claude Gnos, 2012. "The unemployment issue," Chapters, in: Claude Gnos & Sergio Rossi (ed.), Modern Monetary Macroeconomics, chapter 6, pages 166-192, Edward Elgar Publishing.
    12. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2011. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 1-23.
    13. C Katseli & A Theofilakou & K Zekente, 2020. "Central Bank Independence and Inflation Preferences: New Empirical Evidence on the Effects of Inflation," Economic Issues Journal Articles, Economic Issues, vol. 25(1), pages 1-29, March.
    14. Sarah Godar & Christoph Paetz & Achim Truger, 2015. "The scope for progressive tax reform in the OECD countries. A macroeconomic perspective with a case study for Germany," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 79-117.
    15. Pesenti, Amos, 2016. "The meaning of monetary stability," FSES Working Papers 475, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    16. Andrzej Wojtyna, 2008. "Polityka pieniężna w strefie euro: dawne obawy, nowe wyzwania," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 1-20.
    17. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    18. Angel Asensio, 2008. "(Post) Keynesian alternative to inflation targeting," Post-Print halshs-00335560, HAL.
    19. Jeroen Klomp & Jakob De Haan, 2010. "Inflation And Central Bank Independence: A Meta‐Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 593-621, September.
    20. Dumitriu, Ramona & Stefanescu, Răzvan, 2013. "Decizii strategice ale politicii monetare [Strategic decisions of the Monetary Policy]," MPRA Paper 51242, University Library of Munich, Germany, revised 05 Nov 2013.
    21. D. Masciandaro, 2019. "What Bird Is That? Central Banking And Monetary Policy In The Last Forty Years," BAFFI CAREFIN Working Papers 19127, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

    More about this item

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fan:steste:v:html10.3280/ste2016-118012. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.francoangeli.it/riviste/sommario.aspx?IDRivista=59 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefania Rosato (email available below). General contact details of provider: http://www.francoangeli.it/riviste/sommario.aspx?IDRivista=59 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.