Central bank independence with procedural accountability

Juan Castaneda and Paola Romero

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Independent central banks must be effectively accountable, particularly when they engage in discretionary policies during a crisis. We argue that ex post assessment of central bank performance is insufficient for proper accountability. Using the inflationary episode that followed the Covid-19 pandemic, we show that a central bank explicitly committed to an inflation-targeting rule can deviate substantially from its target, with the extent of the deviation being identified only once it is already too late to correct it. We propose ‘procedural accountability’, a comprehensive framework for monetary policymaking. Drawing on the gold standard experience and existing rule-based proposals, we specify the minimal formal architecture any such regime must satisfy.

Keywords: accountability; central banks; discretion; inflation targeting; monetary policy (search for similar items in EconPapers)
JEL-codes: E42 E58 E61 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2026-10-23
New Economics Papers: this item is included in nep-mac, nep-min and nep-mon
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Published in Economic Affairs, 23, October, 2026. ISSN: 0265-0665

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:140780

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