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The Crisis of Central-Bank Governance
The relationship between monetary authorities and governments differs in important ways between the United States and the eurozone. The US invariably falls into a traditional pattern whereby governing politicians, with an eye toward the electoral cycle, tend to favor expansionary fiscal policies and looser monetary conditions, while the Federal Reserve, wary of political pressure, endeavors to assert its independence. If the Fed’s autonomy were called into question, domestic – and, by extension, global – macroeconomic stability would be jeopardized. The pattern in the eurozone is the opposite of this. On the ... (full story)