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Central Banking, Monetary Theory and Practice

Essays in Honour of Charles Goodhart, Volume One

Edited by Paul Mizen

Celebrating the contribution that Charles Goodhart has made to monetary economics and policy, this unique compendium of original papers draws together a highly respected group of international academics, central bankers and financial market regulators covering a broad range of issues in modern monetary economics. Topics discussed include: central bank independence; credibility and transparency; the inflation forecast and the loss function; monetary policy experiences in the US and the UK; the implications of Goodhart’s Law; the benefits of single versus multiple currencies; and money, near monies and credit.
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John S. Flemming


of ‘No money, no inflation’, ‘Central bank independence’ and ‘The use and meaning of words in central banking’ John S. Flemming It is an honour for me, as others have said of themselves, to pay tribute to Charles Goodhart, my colleague here at the Bank for most of the 1980s and a friend for much longer. When I briefly taught Monetary Economics at the LSE, while Alan Walters was on leave, it was Charles’s book Money Information and Uncertainty on which I relied almost exclusively. Happily I had been in the Bank of England temporarily in 1976 when the publication party was held there. I am also honoured to have been invited to discuss such distinguished contributors as we have just heard. With two Charles’s, two Deputy Governors, a Freedman and a Friedman (both pronounced the same) they have to be Ben (Friedman), Charles (Goodhart), Chuck (Freedman) and Mervyn (King) from now on, but I shall take them in order of their presentations. Mervyn King cited telling and incontrovertible data on correlations between money, prices and output in the long run and the short run – and of effects of expected inflation on velocity in hyper-inflation and subsequent stabilisations. Introducing a third Friedman in the discussion, Milton Friedman’s famous dictum cited by Mervyn could be supported by Mervyn’s correlations – but that is all they are. The issue of causation depends on how the central bank actually behaves, which might change from time to time. Mervyn says...

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