SMP: Knowledge Problem in Central Banking: Part I

Primera parte de dos posts sobre problemas de conocimiento en la banca central para Sound Money Project.

In my previous posts, Andreas Hoffmann and I discussed the problem of unintended consequences in monetary policy, particularly as applied to the U.S. Federal Reserve and the European Central Bank in the context of the 2008 crisis. This post tackles a related issue: the so called “knowledge problem.” This term was coined after Hayek’s engagement in the debate on the feasibility of economic calculation under socialism. It has also been applied to central banking; even though banking faces different problems than those Hayek was concerned about, there are some common threads. This first post discusses Hayek’s “knowledge problem.” Our next post extends the problem to monetary policy.

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