Central Banking in a Democracy

14 Pages Posted: 17 Nov 2012

See all articles by Alan S. Blinder

Alan S. Blinder

Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: 1996


A former Vice Chairman of the Board of Governors of the Federal Reserve System states his opinion on the Fed's constituency, its policy goals, its need for credibility and independence, and its obligation to be open, accountable, and candid in a democratic society. He argues that the Fed is, and should be, charged with the responsibility of pursuing the two compatible goals of price stability and low unemployment. He acknowledges that the Fed performs best when independent of politics. He maintains that such independence is consistent with democracy as long as the public's elected representatives set the Fed's policy goals, appoint its leaders, and retain ultimate control in cases of dire emergency.

Suggested Citation

Blinder, Alan S., Central Banking in a Democracy (1996). FRB Richmond Economic Quarterly, vol. 82, no. 4, Fall 1996, pp. 1-14. Available at SSRN: https://ssrn.com/abstract=2125943

Alan S. Blinder (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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