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A Comparative History of Central Bank Behavior

Consistency in Monetary Policy in the US and UK

9781803926599 Edward Elgar Publishing
John H. Wood, Reynolds Professor of Economics, Emeritus, Wake Forest University, US
Publication Date: November 2022 ISBN: 978 1 80392 659 9 Extent: c 256 pp
It is widely believed that central banks have grown (the Bank of England) or were established (the Federal Reserve) to pursue the twin objectives of monetary and price stability. But why should they? Central bankers are people, too, whose behavior is presumably determined, like the rest of us, by their incentives and the information available to them. The author explores this question.

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It is widely believed that central banks have grown (the Bank of England) or were established (the Federal Reserve) to pursue the twin objectives of monetary and price stability. But why should they? Central bankers are people, too, whose behavior is presumably determined, like the rest of us, by their incentives and the information available to them. The author explores this question.

Two sets of data confirm the reservations. Central banks have often worsened, even initiated, monetary instabilities by bailing out the risk-takers and their effects on prices, which depending on the quantities of money created by central banks, have often been catastrophic. The evidence suggests that central bankers have really been in business to support the politically powerful upon whose favors they depend, particularly high-spending governments and needy financial institutions. The book consists of several examples of this behavior and its consistency during wars and financial crises in the UK and US over the course of the last two centuries.

Professors and students of finance will find A Comparative History of Central Bank Behavior to be a compelling and thoughtful exploration of how central banks have historically responded to and influenced financial markets.
Critical Acclaim
‘By mixing political economy and history in perfect proportions this book forcefully presents enduring and timely lessons about central banks, their purposes and their accomplices. I could not put this book down.’
– Thomas Sargent, New York University and Hoover Institution, Stanford, US
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