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Journal of Economic Literature: Vol. 48 No. 1 (March 2010)
JEL Volume. 48, Issue 1 | 
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JEL Forthcoming Articles
JEL Indexes (Members Only)How Central Should the Central Bank Be?
Article Citation
Blinder, Alan S. 2010. "How Central Should the Central Bank Be?."
Journal of Economic Literature,
48(1): 123-133.
DOI: 10.1257/jel.48.1.123
DOI: 10.1257/jel.48.1.123
Abstract
The nature and scope of the Federal Reserve's authority and the structure of its decision
making are now "on the table" to an extent that has not been seen since 1935, and
the Fed's vaunted independence is under some attack. This essay asks what the Federal
Reserve should -- and shouldn't -- do, leaning heavily on the concept of economies of
scope. In particular, I conclude that the central bank should monitor and regulate systemic
risk because preserving financial stability is (a) closely aligned with the standard
objectives of monetary policy and (b) likely to require lender of last resort powers. I
also conclude that the Fed should supervise large financial institutions because that
function is so closely to regulating systemic risk. However, several other functions now
performed by the Fed could easily be done elsewhere. ( JEL E52, E58, G21, G28)
Article Full-Text Access
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Authors
Blinder, Alan S. (Princeton U)
JEL Classifications
E52: Monetary Policy
E58: Central Banks and Their Policies
G21: Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G28: Financial Institutions and Services: Government Policy and Regulation
E58: Central Banks and Their Policies
G21: Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G28: Financial Institutions and Services: Government Policy and Regulation
