Spare some sympathy for central bankers

Favorable supply-side conditions are gone and fiscal activism poses challenge

Masaaki Shirakawa

October 25, 2022 17:00 JST

20221024 Joe Biden construction worker.JPG

U.S. President Joe Biden greets a worker as he arrives to speak about investments in infrastructure in Los Angeles on Oct. 13: Is it possible for unelected central bankers to ask the government in a democratic society to trim their fiscal plans? © Reuters

Masaaki Shirakawa is a former governor of the Bank of Japan.

The fundamental issues of economic debate change little even as economies and financial markets go through their own transformations. A case in point is the perennial controversy over the effectiveness of monetary policy versus fiscal policy as a tool of macroeconomic stabilization.