An economist assesses the relationship between the Central Bank and the government | Financial forum
Central bank independence, which is the most important basis for enabling sound monetary policy, is not synonymous with being undisciplined or insensitive to economic conditions in the country; rather, it is a tool designed with the political economy in mind governing the relationships between key decision-makers to ensure that monetary policies serve as effective tools for controlling inflation, says Hossein Abbasi, senior lecturer at the Department of Economics at the University of Maryland.
Here is a translation of his article for the Persian business daily Donya-e-Eqtesad:
Today’s economies are complex. The dimensions of economic activities are very large; they are diverse and economic ties are close. This complexity both defines multiple goals for the economy and provides policymakers with multiple tools to pursue those goals. Therefore, in almost every sector there is a need for a group of specialists who focus all their attention on the relationships that exist in this sector and on designing the appropriate tools to achieve certain objectives.
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