2023/06/01 by Pierluigi De Rogatis
#Central Bank #Central Bank Independence #Inflation #International Political Economy #Monetary Policy
paper · doi:10.5526/esj165
The article explores the changing perceptions of centralbanks' (CBs) role in political and economic policies in the wake of theCovid-19 pandemic. The unprecedented lending by CBs to governments has putpressure on the traditional role of custodian of low inflation and pricestability. The article examines the effects of inflation as predicted andforecasted by the macroeconomic model AD-AS and presents figures and statisticsto demonstrate the recent surge in price levels in the European Union, the EuroArea, the UK, and the US. The article also raises questions about the behaviourof CBs in developed countries and their stretching of powers in the face of thecurrent crisis, and critically analyses three recent papers that discuss therelationship between fiscal and monetary authorities, the continuous strugglebetween inflation hawks and doves in monetary committees, and the role ofdemocracy in central bank independence. The research questions of these papersare also discussed in the article, which concludes by calling for furtherresearch to understand the complex relationship between CBs and governments inthe current economic climate.