Central bank ‘activism’ risks long-run costs, paper argues

US Federal Reserve interior
Photo: Flickr/US government/Britt Leckman

Central bank “activism” may have short-term benefits for society but is likely to come with long-term costs, new research argues.

In Central bank activism, Christina Parajon Skinner develops a “novel framework” for viewing activism on a “spectrum of legitimacy”. Her article “refers to central bank activism as situations in which immediate public policy problems push central banks to aggrandise their power beyond the text and purpose of their legal mandates”.

She gives three examples of past

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