2019-04-21 10:07:54 Sun ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
Central bank independence remains important for core inflation containment in the current age of political populism. In accordance with the dual mandate of both price stability and maximum sustainable employment, most central banks seek to solve the dynamic consistency problem on the basis of a key desire to insulate monetary policy decisions from political influence.
A landmark empirical study of cross-country comparisons by Alberto Alesina and Lawrence Summers confirms that countries with better central bank independence experience lower inflation without suffering any real economic output or labor force penalty. An independent central bank can enhance fiscal discipline by reducing the relative likelihood of fiscal dominance and monetization of perennial budget deficits.
Historical experience and economic theory teach us an informative lesson. When monetary policy is subject to political control, people expect dovish expansionary interest rate adjustments and so anticipate higher wages and prices in response. The undesirable economic outcome is stagflation (or the worst-case scenario of both high inflation and high unemployment). It can cost prohibitive welfare losses for the central bank to bring down inflation with subsequent interest rate hikes. Key credible apolitical monetary policy decisions would thus promote price stability with minimal real impact on economic growth, employment, and capital investment.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2018-03-17 09:35:00 Saturday ET
Facebook faces a major data breach by Cambridge Analytica that has harvested private information from more than 50 million Facebook users. In a Facebook pos
2017-04-01 06:40:00 Saturday ET
With the current interest rate hike, large banks and insurance companies are likely to benefit from higher equity risk premiums and interest rate spreads.
2019-02-06 10:36:49 Wednesday ET
President Trump delivers his second state-of-the-union address to U.S. Congress. Several key themes emerge from this presidential address. First, President
2023-03-28 11:30:00 Tuesday ET
The Federal Reserve System conducts monetary policy decisions, interest rate adjustments, and inter-bank payment operations. Peter Conti-Brown (2017)
2023-06-14 10:26:00 Wednesday ET
Daron Acemoglu and James Robinson show that good inclusive institutions contribute to better long-run economic growth. Daron Acemoglu and James Robinson
2025-10-12 13:32:00 Sunday ET
Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fund