Unelected Power, the quest for legitimacy in central banking and the regulatory state, by Paul Tucker
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At the 2015 Sintra conference, European Central Bank President Mario Draghi addressed the topic of structural reforms in Europe. One of the audience members chastised him for discussing policies out-of-scope for a central banker. Mario’s response: I can’t do my job, to achieve price inflation close-to-but-below two percent, if labor and product markets are rigid. Similarly, Fed Chair Janet Yellen was criticized for worsening inequality as the policies of quantitative easing (QE) worked through the asset channel. Her response: unemployment is the worst contributor to inequality, and QE supports the objective of maximum sustainable employment.
Were these central bankers just doing their jobs to achieve their institutional mandates, with societal distributional outcomes a second-order consequence? Were these central bankers doing their job but deploying tools beyond their mandates, because elected policy authorities were not doing their own jobs? In other words, were these central bankers...