1. Is full (i.e. instrument and goal) central bank independence
... be some limit on their ability to issue bonds continuously to finance deficits may decide to limit deficit spending. Masciandaro and Tabellini (1988) found that New Zealand, who had the lowest independence had the highest fiscal deficit and the United States with the highest independence had a similar deficit to the other countries. Grilli et al (1991) also found a negative relationship, however, if political factors ... central bank gives rise to a democratic deficit (King et al (1996). This opens the problem of a moral hazard for an unaccountable central bank. However, one should not c...
- Word Count: 4086
- Approx Pages: 16
- Grade Level: Undergraduate