Central bank reform: The Federal Reserve in international perspective

In this paper, the authors show how the degree of central bank independence from government may be key in explaining why some countries-notably, Austria, Switzerland, the United States and West Germany-have achieved lower overall inflation rates than have other countries where the government is able to dictate the course of monetary policy. Given that the Federal Reserve System has at the same time fallen well short of providing the degree of price stability featured in Switzerland and West Germany, they also discuss how reforms aimed at strengthening the role of the regional bank presidents and/or the implementation of a mandatory price stability objective might lead U.S. monetary policy performance to more closely mirror the German and Swiss experience.