Working Papers

Crumbling Boundaries and the Risks to Central Bank Independence

The debate over the appropriate relationship between monetary policy and fiscal policy is an old one. However, it has taken on renewed significance since the crisis of 2007-2008 as both the Fed and the Treasury have initiated policies that breached accepted norms that had largely been in place since the Treasury-Fed Accord of 1951. My view is that these actions have undermined the institutional arrangements intended to support the independence of our central bank and frayed the boundaries between monetary and fiscal policies.

Monday, October 14, 2024 0 min read By:

Charles I. Plosser,

Research Team: Economic Policy Working Group ,