(2016), “Central Bank  http://www.ecb.europa.eu/press/key/date/2017/html/sp170330.en.html[03.04.2017 15:53:14]  Central bank independence revisited  Independence Revisited: After the financial crisis, what should a model central bank look like?”, M-RCBG Associate Working Paper Series, No 67, Harvard Kennedy School. [4]For a representative contribution, see Barro, R., and Gordon, D. (1983), “Rules, Discretion, and Reputation in a Model of Monetary Policy”, Journal of Monetary Economics, Vol. 12, pp. 101-121. [5]Tinbergen, J. (1952), On the theory of economic policy, North Holland Publishing Company. [6]See paras. 150 and 155 of the Opinion of Advocate General Jacobs in Case C-11/00, Commission v ECB, EU:C:2003:395 (the “OLAF case”). In this respect Advocate General Jacobs has in the OLAF case cited economic literature noting that the foremost argument put forward in favour of an independent monetary authority is that of price stability because “governments are tempted to create money for their own ends and in order to produce economic benefits in the short term, which eventually leads to an increase in the rate of inflation.” The literature cited by Advocate General Jacobs concludes that “[t]heoretical considerations on the relationship between central bank independence and the rate of inflation are backed by empirical evidence. On the basis of comparisons of the degree of independence of central banks and the inflation record of the respective country a negative correlation between the degree of independence and the inflation record has been generally acknowledged.” The Opinion of Advocate General Jacobs in the OLAF case cites, e.g., Alesina, A., and Summers, L.H.
At some point – and no-one could know at all precisely at what point – demand in the US would begin to outstrip supply and the growing external imbalance between the US and the rest of the world would become unsustainable; relative asset prices – including the dollar’s exchange rate – would over-discount prospective US corporate earnings growth and both equity and foreign exchange markets would then become vulnerable to abrupt correction. Against that background it has been clear for some time that there needed to be a slowdown in the growth of the US economy to a rate which was more sustainable, both in the US itself but also in terms of the imbalance within the global economy – and the debate turned to whether it would come  BIS Review 1/2001  1  as the “soft landing” we would all welcome or a more disruptive “hard landing” which we could all well do without. And slowdown, of course, is what we have seen over the past six months. In the third quarter US GDP growth fell to an annualised rate of some 2¼% - less than half that in the earlier part of last year, and much of the more recent data suggest a further weakening.