Bureaucratic Theory and the Choice of Central Bank Goals

The Case of the Bank of Canada
  • Keith Acheson
  • John F. Chant
Part of the Financial and Monetary Policy Studies book series (FMPS, volume 13)


Economists have frequently asserted that central bank priorities among economic goals have not been appropriate to the public’s desires. For example, one interpretation of the results of Reuber’s pioneering study of central bank preferences was that:

[The Bank of Canada’s] reactions reflect the placing of a very heavy implicit weight on price stability compared with higher employment, presumably based on a judgement about the relative economic costs of more unemployment and more price inflation. The evidence examined on the relative economic costs of price inflation and unemployment suggests that the economic costs of inflation are not as high relative to the costs of unemployment as the reactions and statements of the authorities have implied. [Reuber, p. 132](1)

Relatedly, economists have claimed that central banks have placed an undue emphasis on the state of government security markets. The Bank of England, in particular, has been criticized in this vein.(2) Despite the well documented problems in defining social preferences, an implication of such statements is that central bank’s preferences differ from the public’s priorities. Except for vague statements about the inherent conservatism of central bankers, economists have not contributed substantially to an understanding of this important phenomenon.


Monetary Policy Money Market Price Stability Government Debt Treasury Bill 
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Copyright information

© Martinus Nijhoff Publishers, Dordrecht 1986

Authors and Affiliations

  • Keith Acheson
  • John F. Chant

There are no affiliations available

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