These ideas, supported by a great deal of empirical work, have proven highly influential.5 Indeed, the credibility benefits of central bank autonomy have been widely recognized in the past twenty years, not only in the academic literature but, far more consequentially, in the real-world design of central banking institutions.
For example, in the United Kingdom, the euro area, Japan, and numerous other places, recent legislation or other government action has palpably strengthened the independence of the central banks.6 Rogoff’s proposed solution to the credibility problems of central banks does have some limitations, however, as Ken recognized both in his paper and in subsequent work.