The massive surge of inflation in the 1970s and 1980s and the reluctance of some finance ministries (and their associated central banks) to combat it made economists and the public aware that politicians may not have the appropriate incentives to bring or to keep inflation down. Why are independent central banks more successful when it comes to bringing down inflation rates? The reason is that politicians and central bankers tend to have somewhat different objectives and largely different time horizons. Technocrats at central banks mandated to ensure monetary stability can easily afford to take a long-term view, while politicians feel much more constrained by the pressure to produce short-term results. This seems relevant since an inflation-preventing or inflation-combating policy is usually associated with real costs in the short run, while the benefits appear only over time. A government might be seduced into conducting an inflationary policy in order to reap benefits in the short term, while the costs will only become evident years later. Therefore, there is a strong probability (but, of course, no guarantee) that independent central banks will do a better job than governments with regard to the issue of inflation. This insight - and perhaps the relative success of most independent monetary authorities with the disinflation process in the 1970s - has paved the way for granting more independence to monetary authorities. Essential preconditions for the independence of a central bank include a solidly based consensus concerning its mandate and a commitment to transparency and accountability.

On the one hand, deregulation and the opening of markets for products and factors and, on the other hand, the phenomenal progress in information and communications technology.3 On a macroeconomic level, the explanations lead to three possible conclusions. First, to the conclusion that the economy has lost some of its cyclical dynamic, a change which is explained by the increased transparency and more efficient steering of entrepreneurial processes as well as the fact that inventories have been cut or completely eliminated. Second, that there has been a permanent reduction in the natural rate of unemployment which results in an upward shift of the potential output curve and thus to significantly higher growth rates in the transition phase. Third, that there is a gain in long-term productivity growth, ie a steeper potential output curve in future. Academic economists usually react with scepticism to these basically supply-side hypotheses. In fact, they are assumptions which, plausible as they may be, have not been empirically tested. Monetary policymakers cannot simply ignore them because they relate to interconnections which are important for the formulation of policies. It would be just as foolish, however, to accept such theories uncritically and to include them in the decision-making process simply because they sound plausible. In any case, the assertions put forward under the label “new economy” create additional uncertainties. In this particular state of uncertainty, there is growing interest in an ongoing analysis and interpretation of indicators. In this way, one searches for early evidence for the pros and cons of these hypothetical changes.