Cover

Half-title

Series-title

Title

Copyright

Dedication

Contents

Figures

Tables

Preface

1 The Institutional Make-up and Evolution of Central Bank–Government Relations: An Introduction

INTRODUCTION

INFLATION THEN AND NOW

GOVERNING STRUCTURES

CONFLICTS AND CONFLICT RESOLUTION

OBJECTIVES AND RESPONSIBILITIES IN MONETARY POLICY: FROM EXPERIMENTATION AND AUTONOMY TO ACCOUNTABILITY AND DISCLOSURE

THE CENTRAL BANK AND THE STATE

THE DOMAIN OF CENTRAL BANKING

SUMMARY

2 Legislation Alone Does Not a Central Bank Make: Political Structure, Governance, and Reputation in Monetary Policy

INTRODUCTION

POLITICAL STRUCTURE AND CENTRAL BANK AUTONOMY

THE ROLE OF GOVERNANCE AND CONTRACTS FOR CENTRAL BANKERS

The Role of Fiscal Policy

A Brief Detour to the Antipodes

COMMON FEATURES IN MONETARY AND FISCAL POLICIES AND INDICATORS OF CENTRAL BANK PERFORMANCE

Inflation and Inflation Persistence

Credibility of Policy Regimes

Caveats

Interest Rates

Central Bank Independence

Real Economic Performance

CENTRAL BANKS AND CONFLICTS WITH GOVERNMENT

CREDIBILITY AND REPUTATION OF MONETARY POLICY

THE FISCAL AND MONETARY POLICY NEXUS: DO WE NEED A CENTRAL BANK AT ALL?

SUMMARY

3 Central Bank Personalities and Monetary Policy Performance

INTRODUCTION

LEGACIES OF THE PAST

FRIEDMAN’S HYPOTHESIS

CEOs OF CENTRAL BANKS

CASE STUDIES

The Fed and the Tension between Personalities and Policies

The Bank of Canada and the Directive

The “Directive” in International Perspective

The Bundesbank and the Preeminence of Policy

Drawing Some Conclusions

THE THREAT TO MONETARY POLICY IN THE TWENTY-FIRST CENTURY: FINANCIAL INSTABILITY

Varieties of Shortsightedness in Monetary Policy

SUMMARY

4 Econometric Analysis of Central Bank Behavior: An Evolutionary Approach

INTRODUCTION

VARIETIES OF REACTION FUNCTIONS

Characterizing the Reaction Function

Identifying the Central Bank’s Preferences

Discretion in the Form of a Rule

THE POLICY PARADOX

NEW ESTIMATES OF CENTRAL BANK REACTION FUNCTIONS: SPECIFICATION AND ECONOMETRIC CONSIDERATIONS

Motivation

Specification of the Forecast Function

Specification of the Reaction Function

EMPIRICAL EVIDENCE

Some Stylized Features of the Data

Reaction Functions for Individual Countries

Extensions to Basic Reaction Function Estimates

Cross-Country Reaction Function Estimates

SUMMARY

5 Contrasting Quantitative and Qualitative Assessments of Central Bank Behavior and the Evolution of Monetary Policies

INTRODUCTION

RECONCILING THE ECONOMETRIC AND QUALITATIVE EVIDENCE

THE EMERGENCE OF COMMON FEATURES IN MONETARY POLICY: THE TRIUMPH OF POLICIES?

A HALF CENTURY OF EXPERIMENTATION

Exchange Rate Pressure

Fiscal Pressure

Political Pressure

AN ASSESSMENT

SUMMARY

6 Accountability, Disclosure, and Conflict Resolution

INTRODUCTION

HOW MUCH TO TALK? CENTRAL BANK SIGNALING AND CREDIBILITY

THE MEANING OF ACCOUNTABILITY

THE VALUE OF DISCLOSURE

THE IMPORTANCE OF CONFLICT RESOLUTION PROCEDURES AND GOVERNANCE

Governance and Central Bank Accountability

MEASURING CENTRAL BANK ACCOUNTABILITY AND DISCLOSURE

Indexes of Accountability and Disclosure

Inflation Forecasts and Central Bank Communication Redux

SUMMARY

7 Inflation Targets versus Other Inflation Control Measures: Two Sides of the Same Coin?

INTRODUCTION

THE END OF PERSONALITIES AND THE EMERGENCE OF A FRAMEWORK FOR MONETARY POLICY

EXCHANGE RATE REGIMES, MONEY, INFLATION, AND TARGETING: WHICH ONE IS A COHERENT POLICY FRAMEWORK?

Exchange Rate Regimes

Money Growth Targets

Inflation Targeting

DISCLOSURE VERSUS FLEXIBILITY REDUX

THE APPEAL OF “COMMUNICATION” AS AN INSTRUMENT OF MONETARY POLICY

The Importance of Forecasts

COMMUNICATING MONETARY POLICY

PRACTICAL ISSUES WITH INFLATION TARGETS: THE CRUCIAL ROLE OF THE INSTITUTIONAL FRAMEWORK

SUMMARY

8 The Changing Face of Central Banking: Epilogue

INTRODUCTION

DE JURE OR DE FACTO AUTONOMY: DOES IT MATTER?

WHITHER CENTRAL BANK PERSONALITIES?

QUALITATIVE VERSUS QUANTITATIVE FORMS OF ANALYSIS OF CENTRAL BANK PERFORMANCE

TOWARD THE HOLY GRAIL IN MONETARY POLICY?

Bibliography

Index