Tag Archives: Central bank governance

Politics beat quality any day: Diamond calls it quits

Politics are powerful. Much more powerful than scientific arguments. This is probably a well-known dictum, and I am certain that I could find some cool references to great thinkers who have said something like this in the past. I have refrained from doing so, as I just wanted to put this recent example within economics on record: In the US, members of the board of governors for the Federal Reserve are appointed through a long-winded political process. The fact that elected politicians should have a saying in the nomination of members who will shape monetary policy is sensible from a democratic point of view. I will not dispute that. However, … Continue reading

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Posted in Economists, Monetary policy | Tagged , , | 1 Comment

Sveriges Riksbank raises rates again; Svensson dissents again

Yesterday, Sveriges Riksbank (central bank of Sweden) announced that it raised the main policy rate to 1.5%. This is the fifth consecutive 25 basis point increase since last summer. It also marks the twelfth time in a row that Executive Board Member, and Deputy Governor of the Bank, Lars Svensson dissents by voting for a looser stance (in this case he advocated an unchanged rate). The last time he agreed with an interest rate decision was in February 2009. The Inflation-Targeting Riksbank makes all this information publicly available on their web site (see the voting records here). This high degree of transparency is not uncommon among inflation targeting central banks, … Continue reading

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Posted in Economists, Macroeconomics, Monetary policy | Tagged , , , , | 1 Comment

No Weber after Trichet: Politics 1, Treaty 0

Jean-Claude Trichet steps down as President of the European Central Bank this October. So much is certain, if things go according to the statutes of the ECB. Things do not necessarily go according to the statutes, but it seems a certain bet that Trichet will step down as planned. A question of much concern is who will succeed him? There has been much speculation that the next President would have to come from Germany. (A common conclusion derived from the hypothesis that the Germans and French battle over ECB leadership and influence, with the first President Duisenberg, a Dutch promising to step down after a half term, being a compromise … Continue reading

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