bain_y_howells__monetary_economics__policy_and_its_theoretical_basis

242 MONETARY ECONOMICS
9. Why should central bankers be particularly adverse to inflation?
10. Is the argument over the independence of central banks being biased in
favour of independence by the assumption of forward-looking market
agents but myopic voters?
11. How are the following arguments discussed in this chapter affected, if at
all, by an assumption of endogenous money?
(a) the expectations-augmented Phillips curve
(b) policy irrelevance
(c) central bank independence.
Further reading
The expectations-augmented Phillips curve, new classical models, and the
policy irrelevance theorem can be found in any recent intermediate macroeconomics
text. A good account, together with criticisms, is provided by
Acocella (1998). This also discusses public choice views and political business
cycles.
Treatment of the issues relating to central bank independence are scattered
through countless articles in journals. A good reference, especially in
relation to credibility and accountability is H M Treasury (2002) ch.2. The
arguments in favour of central bank independence can be found in many
places, including Cukierman’s (1992) book, and in two publications from
the early 1990s by the Institute of Economic Affairs: Otmar Issing (1993)
and Wood, Mills and Capie (1993). For more rounded views see Eijffinger
and de Haan (1996). For more scepticism, see Forder (1998, 1999) and for
an attempt to defend democracy, see Bain and Howells (1996).