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The limits of `independence' and the policy of the ECB^

  • James Forder

    ()

It is argued that the European Central Bank's independence is not as secure as it seems and that as a result it has appreciable institutional incentives to protect and enhance its position. It follows that its behaviour should not be understood as being solely determined by the pursuit of price stability. One consequence is that certain points on which it has been criticised on the basis that its approach makes for ineffective monetary policy might be better understood as, often effective, attempts to protect its position. Another is that making a central bank (or any other institution) “completely independent'' may be much harder than it seems, and failed attempts, which come close, are not necessarily to be preferred, even by the advocates of independence, to less ambitious designs. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11127-005-3057-8
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Article provided by Springer in its journal Public Choice.

Volume (Year): 125 (2005)
Issue (Month): 3 (December)
Pages: 431-444

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Handle: RePEc:kap:pubcho:v:125:y:2005:i:3:p:431-444
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100332

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  1. Eijffinger, S.C.W. & Buti, M. & Franco, D., 2003. "Revisiting EMU's stability pact : A pragmatic way forward," Other publications TiSEM 2074fa3c-362a-4366-a649-5, Tilburg University, School of Economics and Management.
  2. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," World Bank Economic Review, World Bank Group, vol. 6(3), pages 353-98, September.
  3. Pierce, James L., 1978. "The myth of congressional supervision of monetary policy," Journal of Monetary Economics, Elsevier, vol. 4(2), pages 363-370, April.
  4. Adam S. Posen, 1995. "Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 253-274 National Bureau of Economic Research, Inc.
  5. Willem H. Buiter, 1999. "Alice in Euroland," LSE Research Online Documents on Economics 20226, London School of Economics and Political Science, LSE Library.
  6. Grier, Kevin B., 1991. "Congressional influence on U.S. monetary policy : An empirical test," Journal of Monetary Economics, Elsevier, vol. 28(2), pages 201-220, October.
  7. repec:cup:cbooks:9780521788885 is not listed on IDEAS
  8. John Chant & Keith Acheson, 1972. "The choice of monetary instruments and the theory of bureaucracy," Public Choice, Springer, vol. 12(1), pages 13-33, March.
  9. Dorothee Heisenberg, 2003. "Cutting the Bank Down to Size: Efficient and Legitimate Decision-making in the European Central Bank After Enlargement," Journal of Common Market Studies, Wiley Blackwell, vol. 41(3), pages 397-420, 06.
  10. Kane, Edward J., 1980. "Politics and Fed policymaking : The more things change the more they remain the same," Journal of Monetary Economics, Elsevier, vol. 6(2), pages 199-211, April.
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