Publication Date

2013

Abstract

This paper argues that the choice between free banking and central bank NGDP targeting is a difficult to answer empirical question, contrary to the position of those on either side of the debate. Public choice concerns, the lack of the signals of profit and loss, and optimal determination of currency areas are points against any form of central banking. However, free banking may be suboptimal relative to central bank NGDP targeting for three reasons explored here. Until more data become available, it is impossible to gauge the relative importance of one set of these tradeoffs against the other.

Document Type

Article

Keywords

Free banking; NGDP targeting; Public choice; Comparative institutional analysis

Disciplines

Business | Business Administration, Management, and Operations | Corporate Finance | E-Commerce | Finance and Financial Management

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License.