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Four Lectures on Central Banking

Author

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  • Arthur Grimes

    (Motu Economic and Public Policy Research and the University of Auckland)

Abstract

These four lectures on central banking topics were presented in London between September and December 2013. The lectures were delivered as part of Arthur Grimes’ NZ-UK Link Foundation Visiting Professorship, based at the University of London’s School of Advanced Study. They followed his stepping down as Chair of the Reserve Bank of New Zealand in September 2013 after ten years in that role. The four lecture topics (and the institution at which they were delivered) are: Inflation Targeting: 25 Years’ Experience of the Pioneer (Bank of England); A Floating Exchange Rate is the Worst Exchange Rate Regime (except for all the others that have been tried) (University College London); How Prudent are Macroprudential Policies? (London School of Economics); Responsibility and Accountability in the Financial Sector (Institute of Advanced Legal Studies). A key theme across all four lectures is the importance of ensuring that central bank policies and actions are time consistent. Time consistency requires that a central bank can commit to implementing the policies that it says it will implement. For instance, if a central bank commits to delivering low inflation, it will not use its powers to deliver other goals at the expense of low inflation. Similarly, if it commits not to bail out banks in the event of failure, then it (and other official bodies) will not bail out a failed bank.

Suggested Citation

  • Arthur Grimes, 2014. "Four Lectures on Central Banking," Working Papers 14_02, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:14_02
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    File URL: https://motu-www.motu.org.nz/wpapers/14_02.pdf
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    References listed on IDEAS

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    1. repec:aei:rpbook:53074 is not listed on IDEAS
    2. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    3. Arthur Grimes, 1996. "Public Standards and Private Monitoring: New Zealand’s New Banking Supervision Regime," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 3(3), pages 277-286.
    4. Calomiris, Charles W & Mason, Joseph R, 1997. "Contagion and Bank Failures during the Great Depression: The June 1932 Chicago Banking Panic," American Economic Review, American Economic Association, vol. 87(5), pages 863-883, December.
    5. Michael D. Bordo, 2008. "An Historical Perspective on the Crisis of 2007-2008," NBER Working Papers 14569, National Bureau of Economic Research, Inc.
    6. Shadow Financial Regulatory Committee, 2000. "Reforming Bank Capital Regulation: A Proposal by the U.S. Shadow Financial Regulatory Committee," Books, American Enterprise Institute, number 920273, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Buckle, Robert A., 2018. "Thirty years of inflation targeting in New Zealand: The origins, evolution and influence of a monetary policy innovation," Working Paper Series 8086, Victoria University of Wellington, Chair in Public Finance.
    2. John McDermott & Rebecca Williams, 2018. "Inflation Targeting in New Zealand: An Experience in Evolution," RBA Annual Conference Volume (Discontinued), in: John Simon & Maxwell Sutton (ed.),Central Bank Frameworks: Evolution or Revolution?, Reserve Bank of Australia.

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    More about this item

    Keywords

    Central banking; inflation targeting; exchange rate systems; macroprudential policy; microprudential policy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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