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Chapter 11: Q.24 (page 316)

Which is more independent, the Federal Reserve or the European Central Bank? Why?

Short Answer

Expert verified

ECB is greatly more independent and arguably slightly responsible than the Federal Reserve.

Step by step solution

01

Assumption

The political independence of the ECB is instrumental to its primary objective of maintaining price stability. It is a cornerstone of the euro area’s monetary system. Extensive empirical evidence and theoretical analyses have shown that independent central banks are better capable of maintaining low inflation rates.

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