TY  - JOUR
AU  - Fischer,Stanley
TI  - Modern Approaches to Central Banking
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5064
PY  - 1995
Y2  - March 1995
UR  - http://www.nber.org/papers/w5064
L1  - http://www.nber.org/papers/w5064.pdf
N1  - Author contact info:
Stanley Fischer
Governor
Bank of Israel
One Kaplan Street
Jerusalem 91007
ISRAEL
Tel: 9722-655-2701
Fax: 9722-652-8419
E-Mail: sfischer@bankisrael.gov.il
AB  - 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.
ER  -