What are the pros and cons of having an independent Central Bank which can't be easily influenced by government officials?
Do most countries have an independent Central bank? Why or why not?
In the case of Mexico, the independence has served to reduce the iinflation rate, therefore, is adequate. However, failing to include the objective of economic growth, its actions have led to the stagnation of the Mexican economy. Independence, in this sense, is detrimental, for a variable that is perhaps more important than inflationary stabilization. In an paper sent to revision, I propose that independence should continue, but the objective of economic growth should be added.
The question of when administrative agencies should be insulated, at least in part, from presidential control is a complex one, but the strongest, most widely accepted arguments for such insulation apply to central banks.
The independence of central banks is part of a political agenda that intends to transfer the economic policy decision from politics to specialists. The theory that support this policy has been challenged for decades by evidences. Curiously, even in face of a pile of anomalies, the conventional theory still rule over all. It is reallt an epistemical puzzle
Yes, The primary justification for an independent Federal Reserve is the need to insulate it from short-term political pressures. Without a degree of autonomy, the Fed could be influenced by election-focused politicians into enacting an excessively expansionary monetary policy to lower unemployment in the short-term.
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