We questioned how effective the Bundesbank had been, in the sense that recessions were at least as costly (in terms of lost output) in Germany than they had been in other countries with less independence. That is, the sacrifice ratio in Germany was not lower, which would have been expected if there had been a material credibility benefit from the Bundesbank's independence.
﻿[3] We cautioned against the cult of central bank independence, that is, the need to avoid excessive concentration on inflation avoidance. Hence the conclusion that a central bank should have goal dependence. Second, there was the academic literature. Stan and I noted that much of the academic literature focused on rules versus discretion in the context of dynamic inconsistency.