How can economic policy-makers use economic history as a guide for their deliberations and decisions? Focusing on the case of central banking, this essay argues that the virtue of history is not only to improve economic models and quantitative studies, but to provide a perspective distinct from standard economic reasoning.
During the eurozone crisis, the European Central Bank (ECB) did not just respond to the risks of financial instability; it also expanded its influence over the economic governance of the European countries and increased its authority in the area of banking supervision. This situation is problematic with regard to the democratic balance of power in Europe.
Economist Allan Meltzer has written a two-volume history of the American central bank that is both a treasure trove of new source material and a second great monetarist historical manifesto.
