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71 Duke L.J. 247 (2021-2022)
Central Bank Activism

handle is hein.journals/duklr71 and id is 246 raw text is: Duke Law Journal VOLUME 71 NOVEMBER 2021 NUMBER 2 CENTRAL BANK ACTIVISM CHRISTINA PARAJON SKINNERt ABSTRACT Today, the Federal Reserve is at a critical juncture in its evolution. Unlike any prior period in U.S. history, the Fed now faces increasing demands to expand its policy objectives to tackle a wide range of social and political problems-including climate change, inequality, and foreign and small business aid. This Article develops a framework for recognizing and identifying the problems with central bank activism. It refers to central bank activism as situations in which immediate public policy problems push the Fed to aggrandize its power beyond the text and purpose of its legal mandates, which Congress has established. To illustrate, this Article provides in-depth exploration of both contemporary and historic episodes of central bank activism, thus clarifying the indicia of central bank activism and drawing out the lessons that past episodes should teach us going forward. This Article urges that, while activism may be expedient in the near term, there are long-term social costs. Activism undermines the legitimacy of central bank authority, erodes central bank political independence, and ultimately renders a weaker central bank. In the © 2021 Christina Parajon Skinner. t Assistant Professor, The Wharton School of the University of Pennsylvania. This Article benefited from feedback provided by workshop or conference participants at The Wharton School, the Federal Reserve Bank of New York, the Bank of England, and from Steve Cecchetti, Brian Feinstein, Howell Jackson, Jeff Lacker, Jon Macey, Paul Mahoney, John McGinnis, Henry Monaghan, Roberta Romano, Michael Salib, George Selgin, Joe Sommer, John Taylor, Mark Van Der Weide, Art Wilmarth, David Zaring, and Leonidas Zelmanovitz. James Blume, Brian Lee, and Jen Yong provided excellent research assistance. And many thanks go to the editors of the Duke Law Journal for their tremendous work on this piece-in particular, Elizabeth Schmitz, Madeline Hundley, Jessica Kuesel, Olivia Daniels, and Janet Bering.

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