Commentary

INTRODUCTION It’s always a pleasure to read a paper by Charles Goodhart, who brings a unique blend of academic rigor and originality, frontline experience, and plain common sense to his musings on central banking. Goodhart points out that the controlling consensus for monetary policy is that it should be focused on achieving and maintaining price stability over time. Both economic theory and experience indicate that prolonged deviations from reasonable price stability—in either direction—can have serious negative implications for economic performance. Goodhart highlights a number of issues that arise in implementing policy within this framework. I’m not going to comment directly on Goodhart’s paper. Rather, reading the paper sparked my own musings on some areas that might benefit from further research, and I thought that with the Federal Reserve Bank of Cleveland launching its Central Bank Institute, this might be an opportune moment for such a discussion. There is considerable overlap between Goodhart’s topics and my own; in large measure he was my inspiration, though in some cases we come at the same subject from different angles. I call this comment “Whither Central Banking Research?” Obviously, my list is not a complete research agenda; rather, it covers four topics that have caught my attention in my work with the Federal Reserve, reinforced in some cases by my experience at the Bank of England.