Notes for reading: Valentin Lazeya Moral history of monetary and fiscal policy -Hromadskyi, 2023

With the exception of the two major crises of this century (the financial crisis of 2008 and the global pandemic of 2020), the world lives within the framework of economic and social institutions created and refined over the past century and a half. It was a time when these institutions “influenced—and were influenced by—morality, which in turn influenced monetary and fiscal policy.” (p. 17-18). For example, in the 1980s and 1990s, economists empirically demonstrated the link between central bank independence and price stability, and politicians across the political spectrum accepted the idea that central banks successfully control inflation, promote international economic cooperation, and enable governments to continue to m what fiscal policy is likely to stimulate economic growth.

In his book, Valentin Lazea, a prominent Romanian economist who played an active role in the design and implementation of fiscal and monetary policy in post-communist Romania, praises the contribution of central banks, but also emphasizes their often unsuccessful forays and interventions. in fiscal policy.

This historical book is written for our time, but it tells a lot about how monetary policy and fiscal policy have come together in the modern era, including most recently during the 2020 crisis, which is perhaps the most successful collaboration between the two since of the Second World War. further.

The book reviewed here is a brief survey of economic history, highlighting technocrats and politicians receptive to their recommendations for economic policy and respecting central bank independence. The author is convinced that there are political responses to economic problems — the responses are morally good or bad.

The paper assumes that central bank governors are not political actors. Thus, the author writes: “In this new context, some politicians do not take very well the newfound independence of the central bank. There is a possibility of a conflict between the ministries of finance (supporters of a soft fiscal policy) and central banks (supporters of a firm monetary policy)” (p.167).

This, in our opinion, is the main questionable aspect of his demonstration. The article provides numerous examples of policymakers concerned with short-term considerations, while ensuring and maintaining price stability requires medium- and long-term policies. It is therefore necessary that central bank decisions be removed as much as possible from the influence of the general political process and entrusted to technocrats whose possible errors are determined mainly, if not exclusively, by their inability to exercise the independence that their status allows.

In our opinion, the reality is more complicated. The author rightly points out that central bankers and their technocrat collaborators have often been objective in their fiscal policy recommendations, but he is less convincing when he suggests that they are completely apolitical. This is a fundamental problem. It does not matter that some central bank governors were members of one party or another and that after their appointment they formally withdrew from their respective parties. What is important is that they may have different views on the role, orientation, and instruments of monetary and fiscal policy, and that these different views stem from the different ways in which they reduce the complexity of the world through a particular economic theory, ideology, or morality, all of which contribute to simplification Read the rest of the article on Contributors.ro