NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Modern Approaches to Central Banking

Stanley Fischer

NBER Working Paper No. 5064
Issued in March 1995
NBER Program(s):   ME

Modern theory has delivered both the conservative central banker and the principal-agent approaches as rationales for the independence of the central bank. The principal-agent approach directs attention to the importance of both clearly defining the goals of the central bank and its command in order to meet the targets assigned to it. The empirical evidence shows not only that greater independence is associated with lower inflation, but also that the central bank's rights not to finance the government and to set interest rates independently increase its effectiveness. The role of inflation targeting and the distinction between price level and inflation targeting are also analyzed.

download in pdf format
   (798 K)

email paper

This paper is available as PDF (798 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5064

Users who downloaded this paper also downloaded these:
Romer and Romer w9274 The Evolution of Economic Understanding and Postwar Stabilization Policy
Alesina and Stella w15856 The Politics of Monetary Policy
Friedman w2668 Targets and Instruments of Monetary Policy
Friedman w7420 The Future of Monetary Policy: The Central Bank as an Army With Only a Signal Corps
Acemoglu, Johnson, Querubin, and Robinson w14033 When Does Policy Reform Work? The Case of Central Bank Independence
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us