Central Bank Independence and Inflation

From "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," by Alberto Alesina and Lawrence H. Summers, Journal of Money, Credit and Banking, Vol. 25, No. 2. (May, 1993), pp. 151-162:

This has changed with the adoption of inflation targeting by central banks. Note also that Adam Posen casts doubt on whether causality runs from central bank independence to improved macroeconomic performance in Central Bank Independence and Disinflationary Credibility: A Missing Link?, NY Fed Staff Report, May 1995.

Comments

[anne]

Dear Mark, you are a wonder. I am all for independence hereafter; fancy arguments about popular influence be gone :) However, pay attention to Oregonian birds. The chickadees are flocking already, and you can see a tree full of chickadees waiting a turn at the seed feeder neaer the divinity school. Only 1 can eat at a time, 1 seed at a time, and the seed is taken to a branch and cracked, each chickadee knows just when to take the turn. I make walkers watch :)

[Mark Thoma]

Comments are osmotic. Yesterday, walking back from a Scholastic Review meeting across campus, I thought to look up into the trees...

[slink]

while tree gazing don''t miss the forest

all this indi fed bs to me
is crypto real wage control

[Mark Thoma]

So far, I seem to be more hawkish on independence than most, but I'm not convinced to back off just yet...

[anne]

Slink

Clever, but look to Europe and Japan and Australia and note that inflation control and high wages can indeed go together. The question is labor market structure and tolerable fiscal policy surely can help. Ben Bernanke is quite right.

[anne]

Oh, I am with Mark. Notice that New Zealand decisively controlled inflation early in the 1990s, and wages and employment were both lifted and have remained high since. Mark asked why New Zealand might have such high short term interest rates just now, and I get it and should have gotten it before, the answer is history. New Zealand's central bank will not risk a return to the inflation of the 1980s.

[anne]

Spain was brought into line on inflation by the requirements for joining the Euro zone. Spain with inflation however indeed had a significantly higher unemployment problem than Portugal which controlled inflation, but the differences in employment still persist.

[anne]

Lovely Israel Schleffler was one of my advisers, and I would regularly battle with him over making philosophy more decidedly small or practical. I was so brash I wrote a final exam on small philosophy in the form of a long Emily Dickinson like poem, yes verse, in which I made Kant a butterfly looking for flowers and ask why it was that he couldn't fly straight but had to dive and dart about a patch of field looking. Oh dear. I got a phone call, asking, well not really asking, me if I really really could manage to treat Kant as a philosopher rather than an insect? I could and did :)

[anne]

That was not the last battle with Scheffler :) Look, he could always win but I needed to be more earthy.

[slink]

surely anne u don't confuse high wages
with high wage rate growth
nor do u likely forget
labor productivity growth
as a bench mark of any decent social contract

all the "emerged states on your list
are hardly more these days then holding actions
as vast capital is shipped to the emerging world
by way of a dooley et al
" protracted north south
wage rate disequilibrium " process
( that is emerged states
large enough
to avoid
pet of the decade
status like say ireland
or
the kiwi all blacks )

[anne]

Scheffler once asked me why I wasn't afraid of him, because he was tough. I told him I liked him too much to be afraid. Curious answer.

[calmo]

Good work slink. You manage the birds like a pro. No looking up into the trees for you. Such savvy, no looking up at all. [Not without googles, (binoculars maybe, an umbrella would do). Something.]
Me, I have trouble with birds. As you can imagine, slow cognitive ability.
And bad eyes makes this something of a hazard for me, birding. "Here come the vultures. Here they come." Is met with a slightly impatient string of "Where? Where?" from me.
That's it, I have no patience for birding.
I leave the field for Anne.