a) The Court can appoint a staff of maximally 150 persons. Minimally 50% of the staff shall have an appointment as scientist, and they shall operate under both common scientific standards and a special statute that has precedence. This special statute shall be established and published by the Court.
b) The Court can instruct the President to provide information. The President may refuse information only if national security is at stake. Information that the President regards as confidential will be treated as confidential by the Court and its staff too, unless the same information can be received via independent other channels too.
c) When State governments within the Federation install their own Economic Courts, then possible disputes shall be settled by the Economic Supreme Court.
d) The Court can install a council of economists and other specialists from the academia. The Court can install chambers of special competence.
e) The Court shall have a budget that compares favourably to the average budget of scientific research institutes of the same size.
A parallel argument on the Central Bank
The analysis about the Economic Supreme Court and the ‘natural monopoly’ argument about economic policy advice, actually finds a parallel with respect to the Central Bank. Reading Galbraith (1998) made me aware of this situation.
Let us regard the situation that market forces determine the rate of interest to a large extent, but that the Bank is not without some power and will use its influence on rates to control inflation.
· Theory dependence: The Bank decides on its policy while using an economic model that contains a mechanism for the determination of the rate of interest - for example the rate of interest will contain anticipated inflation. Hence policy is directly dependent upon the state of economic theory.
· Self-reference (reflexiveness): Since interest rates are sensitive to Bank policy, Bank policy would be part of the model. Popular thought has it that a good Bank would target at zero inflation, but Bank policy generally would be different. For example, a true zero target would require that a period with inflation is followed by deflation, and Banks generally don’t do that. Also, the true price level should include inventories and capital stocks, but inflation generally is measured as the CPI, which is something totally different. These details, and Bank policies on them, should be put into the model (with error terms to allow for possible discretion).