Measuring Central Bank Independence: Ordering, Ranking, or Scoring?

Central bank independence (CBI)as an area for international comparison and for study by international political economists has been around for approximately two decades, spurred on by the work of Bade and Parkin (1982). It probably reached its full fruition with the work of Cukierman and others, centering on work done at the World Bank. There are others too, and we should not ignore them, but since the mid-1990s most of the work done has centered on the Cukierman-type model. Interest in the CBI intensified after models of monetary policy found the likelihood of an inflationary bias in monetary policy operated by democratic governments. That analysis turned on the potential for monetary surprises being perpetrated by governments seeking electoral advantage. Later analysis found that if such incentives were fully anticipated by the public, inflation rates in democracies are higher than they would be if somehow government could make a credible commitment to price stability. The search began for how to establish monetary institutions that can be viewed as credible commitments. Delegation of monetary policy to an independent central bank was one strand of that exploration

Detection of Light Images by Simple Tissues as Visualized by Photosensitized Magnetic Resonance Imaging

In this study, we show how light can be absorbed by the body of a living rat due to an injected pigment circulating in the blood stream. This process is then physiologically translated in the tissue into a chemical signature that can be perceived as an image by magnetic resonance imaging (MRI). We previously reported that illumination of an injected photosynthetic bacteriochlorophyll-derived pigment leads to a generation of reactive oxygen species, upon oxygen consumption in the blood stream. Consequently, paramagnetic deoxyhemoglobin accumulating in the illuminated area induces changes in image contrast, detectable by a Blood Oxygen Level Dependent (BOLD)-MRI protocol, termed photosensitized (ps)MRI. Here, we show that laser beam pulses synchronously trigger BOLD-contrast transients in the tissue, allowing representation of the luminous spatiotemporal profile, as a contrast map, on the MR monitor. Regions with enhanced BOLD-contrast (7-61 fold) were deduced as illuminated, and were found to overlap with the anatomical location of the incident light. Thus, we conclude that luminous information can be captured and translated by typical oxygen exchange processes in the blood of ordinary tissues, and made visible by psMRI (Fig. 1). This process represents a new channel for communicating environmental light into the body in certain analogy to light absorption by visual pigments in the retina where image perception takes place in the central nervous system. Potential applications of this finding may include: non-invasive intra-operative light guidance and follow-up of photodynamic interventions, determination of light diffusion in opaque tissues for optical imaging and possible assistance to the blind

Institutionalisation without internalisation. The cultural dimension of French-German conflicts on European Central Bank independence

Contains fulltext : 120205.pdf (publisher's version ) (Closed access)When accepting the Maastricht treaty, the members of the Euro-zone agreed on the establishment of a very independent European Central Bank (ECB). Over the years, however, French political leaders systematically brought forward proposals undermining the ECB’s independence, much to the dismay of their German counterparts. This pattern of political disagreement on central bank independence has again surfaced during the current sovereign debt crisis, and has contributed to the discord amongst the Euro-zone members on the causes and proper solutions to the problems. This article conducts tests of various factors generally expected to influence the preference for central bank independence. It shows that economic explanations are unable to account for the persistent differences amongst European member-states on this issue. In contrast, national differences in political and economic culture and especially a nation’s score on the dimension Power Distance—its acceptance of centralisation of power in political leaders or institutions—does show a correlation with the different levels of internalisation of the norm of central bank independence. These findings show that institutionalisation of economic norms does not imply their internalisation by the political and the economic elite. In the broader context of current European politics, this may mean that even if European leaders will be able to come up with a common institutional answer to the current crisis, more profound convergence of their underlying economic and political cultures is needed for the successful and sustainable implementation of these solutions

Strategic monetary and fiscal policy interaction in a liquidity trap

In its classical form, the liquidity trap, a term coined by Keynes (1936), is a situation where an increase in money supply fails to reduce the nominal interest rate. The modern literature has concentrated on the case where the nominal interest rate has been driven down to zero (the so called ‘zero bound’). The source of a liquidity trap, in most circumstances, is a sharp fall in aggregate demand; see Keynes (1936), Bernanke (2002). Interest in the liquidity trap has revived in recent years due, in no small measure, to the experience of Japan since 1990. Woodford (2005, 29) discusses the near miss of the US economy from a liquidity trap in the summer of 2003. The era of successful delegation of monetary policy to independent central banks with low inflation targets1 opens up the possibility that sufficiently large negative demand shocks might push an economy into a liquidity trap with huge associated welfare consequences.2 Blanchard et al. (2010) propose an inflation target of 4 percent in order to provide greater range for the nominal interest rate instrument. Our paper provides one framework within which to evaluate this proposal