Does Independence Matter?

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Why do independent central banks (ICBs) generally produce low inflation?  Alex Tabarrok says it’s because bankers tend to get appointed to run ICBs and bankers have a bias toward low inflation.  Megan McArdle says no, it’s because nobody holds Congress accountable for the performance of ICBs, which gives them the freedom to appoint people who will do things they don’t have the guts to do themselves.  Matt Yglesias isn’t sure that the Fed is really an ICB in the first place: it was pretty clearly politicized in the 70s and produced high inflation, and it was quite likely politicized in the oughts and helped produce an economic meltdown.

These all sound like reasonable points to me, and I don’t think they’re mutually exclusive.  Maybe they’re all right.  But I’m curious about something else: what does the academic literature say about the performance of ICBs in advanced economies in the first place?  There must be a considerable amount of research on this point.  If we take some measure of “independence” and compare that to various measures of medium-term economic performance (inflation, wage growth, GDP growth, unemployment, etc.), what do we find?  Does independence really matter very much?  Is there some specific aspect of independence that matters more than others?  Can some friendly econoblogger summarize the literature for us?

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Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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