Article Abstract:
The UK economy is showing very positive macroeconomic performance. However, it is still important to consider whether it was wise to grant the Bank of England independence in 1998. It can be argued that there are deficits in the fiscal and monetary policy-making structure, and that the recent improvement in the UK's inflation record is probably not the result of the new monetary policy arrangements. It is now time to introduce measures to improve cooperation between monetary and fiscal policy, thus addressing the current imbalance in macroeconomic policy.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
The reasons for the decline in the value of the Euro are discussed. It is suggested that a key factor was the increase in the risk premium surrounding the Euro. The Euro will not really recover until there is a significant change in the markets' assessment of the risk premia attached to the Euro.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
The United Kingdom government has given independence to the Bank of England to set interest rates and this has helped to reduce inflation bias. There are costs involved in this decision, which means that there is a lack of coordination between monetary and fiscal policy. Theorists who favor giving independence to central banks tend to ignore this cost. The exchange rate can become overvalued and the trade sector may thus suffer as a result of this lack of coordination.
User Contributions:
Comment about this article or add new information about this topic: