Central-Bank Independence and Monetary Policy

  • Jacob A. Frenkel


This chapter addresses the issue of central-bank independence and its implication for monetary policy. If this chapter had been written twenty years ago, the presentation would have been very different. But the world of today is very different from that of the past. There is a new understanding about the role that governments should play in the economic system, about the role that central banks should play in the economic policy-making process, about the importance of price stability, about the limitations of exploiting the alleged tradeoff between inflation and unemployment for the generation of sustainable growth, and about the domestic and international transmission mechanisms of economic policies. In the new world there is a growing recognition that central-bank independence is a key ingredient in the design of the institutional structure necessary for the successful attainment of the goals of economic policy in general and price stability in particular.


Monetary Policy Central Bank Banking System European Central Bank Price Stability 
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Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  • Jacob A. Frenkel
    • 1
  1. 1.Bank of IsraelIsrael

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