Central bank independence: A political economy approach1

For recent discussions of the applicability of the New Zealand model to the British situation, for example, see Huw Richards, ‘Banking on Freedom’, Times Higher Education Supplement (16 July 1993, p. 40) and Will Hutton, ‘Taking Independence Out of Context’, The Guardian (30 Aug. 1993, p. 9).

The article uses a political economy approach to examine critically the conventional arguments for central bank independence and to make the terms of debate more precise. It assesses the advisability and feasibility of greater autonomy in relation to the constellations of political forces in specific societies and concludes by suggesting how, in the context of developing societies, an accommodation of interests might be reached to support a more autonomous but not fully independent central bank.

Notes

For recent discussions of the applicability of the New Zealand model to the British situation, for example, see Huw Richards, ‘Banking on Freedom’, Times Higher Education Supplement (16 July 1993, p. 40) and Will Hutton, ‘Taking Independence Out of Context’, The Guardian (30 Aug. 1993, p. 9).