TY  - UNPD
A1  - Orphanides, Athanasios
T1  - The boundaries of central bank independence: lessons from unconventional times
T2  - Working paper series / Institute for Monetary and Financial Stability ; 124
N2  - What institutional arrangements for an independent central bank with a price stability mandate promote good policy outcomes when unconventional policies become necessary? Unconventional monetary policy poses challenges. The large scale asset purchases needed to counteract the zero lower bound on nominal interest rates have uncomfortable fiscal and distributional consequences and require central banks to assume greater risks on their balance sheets.
In his paper, Athanasios Orphanides draws lessons from the experience of the Bank of Japan (BoJ) since the late 1990s for the institutional design of independent central banks. He comes to the conclusion that lack of clarity on the precise definition of price stability, coupled with concerns about the legitimacy of large balance sheet expansions, hinders policy: It encourages the central bank to eschew the decisive quantitative easing needed to reflate the economy and instead to accommodate too-low inflation. The BoJ’s experience with the zero lower bound suggests important benefits from a clear definition of price stability as a symmetric 2% goal for inflation, which the Bank adopted in 2013.
T3  - Working paper series / Institute for Monetary and Financial Stability - 124 
KW  - Bank of Japan
KW  - Federal Reserve
KW  - ECB
KW  - zero lower bound
KW  - quantitative easing
KW  - central bank independence
KW  - price stability
KW  - inflation target
KW  - balance sheet risk
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/47598
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-475982
UR  - https://www.imfs-frankfurt.de/de/forschung/imfs-working-papers/
IS  - August 2018
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -