CHAPTER 34FIVE DEBATES OVER MACROECONOMIC POLICY795police into a community to maintain civic order, it gives them strict guidelinesabout how to carry out their job. Because police have great power, allowing themto exercise that power in whatever way they want would be dangerous. Yet whenthe government gives central bankers the authority to maintain economic order,it gives them no guidelines. Monetary policymakers are allowed undisciplineddiscretion.As an example of abuse of power, central bankers are sometimes tempted touse monetary policy to affect the outcome of elections. Suppose that the vote forthe incumbent president is based on economic conditions at the time he is up forreelection. A central banker sympathetic to the incumbent might be tempted topursue expansionary policies just before the election to stimulate production andemployment, knowing that the resulting inflation will not show up until after theelection. Thus, to the extent that central bankers ally themselves with politicians,
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