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Towards a tacit low-degree independence central banking model ?

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  • BLANCHETON Bertrand

Abstract

This article puts the independence of central banks into historical perspective. In doing so, it underlines the highly versatile nature of the balance of forces between central banks and governments. From this viewpoint, the situation of public finances emerges as a key explanatory factor, and an analysis of the sequence of central banking models is proposed from the late 19th century to the present day. The article upholds the thesis of the emergence, since the subprime crisis, of a new model qualified as “tacit low-degree independence”: central banks have, of their own volition, given up some of their de facto independence, helping governments to contain the rise in national debt. But while keeping a step ahead of pressure from governments, they have lost the control of money supply.

Suggested Citation

  • BLANCHETON Bertrand, 2015. "Towards a tacit low-degree independence central banking model ?," Cahiers du GREThA 2015-17, Groupe de Recherche en Economie Théorique et Appliquée.
  • Handle: RePEc:grt:wpegrt:2015-17
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    File URL: http://cahiersdugretha.u-bordeaux4.fr/2015/2015-17.pdf
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    References listed on IDEAS

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    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
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    3. Bertrand Blancheton, 2012. "The false balance sheets of the Bank of France and the origins of the Franc crisis, 1924--26," Accounting History Review, Taylor & Francis Journals, vol. 22(1), pages 1-22, March.
    4. F. Gulcin Ozkan & Ahmet Kipici & Mustafa Ismihan, 2010. "The Banking Sector, Government Bonds, and Financial Intermediation: The Case of Emerging Market Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(4), pages 55-70, January.
    5. Leeper, Eric M., 1991. "Equilibria under 'active' and 'passive' monetary and fiscal policies," Journal of Monetary Economics, Elsevier, vol. 27(1), pages 129-147, February.
    6. Eijffinger, Sylvester C.W. & Geraats, Petra M., 2006. "How transparent are central banks?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 1-21, March.
    7. Thomas J. Sargent & Neil Wallace, 1981. "Some unpleasant monetarist arithmetic," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall.
    8. Marta Campillo & Jeffrey A. Miron, 1997. "Why Does Inflation Differ across Countries?," NBER Chapters,in: Reducing Inflation: Motivation and Strategy, pages 335-362 National Bureau of Economic Research, Inc.
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    12. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    13. Bertrand Blancheton, 2014. "L'autonomie de la Banque de France de la Grande Guerre à la loi du 4 août 1993," Revue d'économie financière, Association d'économie financière, vol. 0(1), pages 157-178.
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    18. 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 353-398, September.
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    More about this item

    Keywords

    central banking; public debt; central bank independence;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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