The seventy odd years since the Great Depression saw a famous rivalry between fiscal and monetary policies for influence. Historically central banks suffered from fiscal dominance since they had to acquiesce in governments “borrowing as much as required at as low a cost as possible”. This state of affairs started changing in the 1980s with a wave of support for central bank independence.
Glenn Stevens: The Australian economy – then and now Address by Mr Glenn Stevens, Governor of the Reserve Bank of Australia, to the Inaugural Faculty of Economics and Business Alumni Dinner, University of Sydney, Sydney, 15 May 2008. I thank Clare Noone for assistance.