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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
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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