Working Paper: CEPR ID: DP18150
Authors: Ben Bernanke; Lucrezia Reichlin
Abstract: This essay reviews 21st Century Monetary Policy by Ben Bernanke, a fascinating account of the evolution of the Fed since the 1950s, and a stalwart defense of the status quo: of the Fed’s remit, its independence, and the tools and practices it now uses to pursue its mandate. The essay supports many of Bernanke’s key points and brings the experience of the ECB to illuminate them by contrast. However, it argues that the book understates the significance of the changes in institutional architecture that have emerged since the crisis. Questions that we thought had been settled are going to have to be addressed anew, albeit in slightly different guises. This will have implications for all aspects of economic governance.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in the Fed's responsibilities (E52) | Fed's actions (quantitative easing, financial market interventions) (E52) |
| Fed's actions (quantitative easing, financial market interventions) (E52) | Stabilization of the economy and financial markets (E63) |
| Fed's evolution since the 1950s (E58) | Response to economic developments (E69) |
| Changes in the Fed's operational model (E52) | Implications for its independence and fiscal footprint (H69) |
| Fed's ability to maintain low inflation (E52) | Credibility and independence (E58) |
| Political consensus established during the Volcker era (E65) | Fed's credibility and independence (E58) |
| Fed's actions during the COVID-19 pandemic (E52) | Continuation of its expanded role (H10) |
| Fed's expanded role (E58) | Implications for future monetary policy and relationship between monetary and fiscal authorities (E63) |