货币金融学7版本英文课程--14-大学课程2.pptVIP

Chapter 14 Structure of Central Banks and the Bank of Canada Formal Structure of the Fed Federal Reserve Districts Informal Structure of the Fed Fed Independence Factors making Fed independent 1. Members of Board have long terms 2. Fed is financially independent: This is most important Factors making Fed dependent 1. Congress can amend Fed legislation 2. President appoints Chairmen and Board members and can influence legislation Overall: Fed is quite independent Other Central Banks 1. Bank of England least independent: Govt. makes policy decisions 2. European Central Bank: most independent—price stability primary goal 3. Bank of Canada and Japan: fair degree of independence, but not all on paper 4. Trend to greater independence: New Zealand, European nations Explaining Central Bank Behavior Theory of bureaucratic behavior 1. Is an example of principal-agent problem 2. Bureaucracy often acts in own interest Implications for Central Banks: 1. Act to preserve independence 2. Try to avoid controversy: often plays games 3. Seek additional power over banks Should the Bank of Canada be Independent? Case For: 1. Independent Bank likely has longer-run objectives, politicians dont: evidence is independence produces better policy outcomes throughout the whole 2. Avoids political business cycle 3. Less likely deficits will be inflationary Case Against: 1. Bank may not be accountable 2. Hinders coordination of monetary and fiscal policy 3. Bank has often performed badly ? 2005 Pearson Education Canada Inc. *? 2005 Pearson Education Canada Inc. The Bank of Canada (The Bank) The Bank was created by the Bank of Canada Act in 1934 and started operations on March 11, 1935 Initially the Bank was a private institution but was nationalized in 1938, so is now a national institution with headquarters in Ottawa The Bank also has regional offices in Toronto, Vancouver, Calgary, Montreal, and Halifax Unlike a private bank that operates in pursuit of profit, the Bank of Canada is re