Politics and the Fed
Posted: 8 Apr 2010
Date Written: April 8, 2010
Abstract
In the standard policy model, a policymaker optimizes the welfare of a representative agent. In practice, policies are chosen in a political process by agents elected by voters. Drawing on evidence from my two volume History of the Federal Reserve, the paper reports many examples of decisions influenced by political pressures. The History shows that the meaning of the independence of the Federal Reserve changed over time reflecting political influences.
Keywords: monetary policy, political economy, Federal Reserve
JEL Classification: E50, E52, E58, N12
Suggested Citation: Suggested Citation
Allan H. Meltzer (Contact Author)
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2282 (Phone)
412-268-7057 (Fax)