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Tuesday, 30 July 2013

Central Bank Organization

By Peter G. Klein

A new NBER working paper by Ricardo Reis (unfortunately gated) tackles “Central Bank Design.” I’ve written a little on this myself, and gave a lecture Saturday at Mises University on “Microeconomics of Central Banking” elaborating on my ideas. I’ve been particularly critical of “independence,” the idea that central bank policies should be immune from public or legislative oversight, to avoid “politicizing” monetary policy. Governance and accountability are central to any model of organizational design, and it’s surprising — stunning, actually — that so many mainstream economists oppose any kind of oversight for the monetary authority.

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