Peaks and troughs: economics and political economy of central bank independence cycles

David Ricardo’s ideas represent, nowadays, a closer representation of the functioning of monetary policy institutions than ever before in history. Central bankers can implement their policies with a degree of autonomy that their predecessors would have only dreamed of. Yet, the history of central banks is rich in modifications to their role and functions (Goodhart, 1988; Lastra, 1996; Goodhart, 2011). In particular, over the past four decades, central banks around the world have seen their mandates progressively narrowed and zoomed on the goal of price stability.