An Episodic History of Modern Fed Independence

The Independent Review: A Journal of Political Economy 20(1): 2015: 99-120

29 Pages Posted: 23 Aug 2012 Last revised: 26 Jan 2017

See all articles by Daniel J. Smith

Daniel J. Smith

Political Economy Research Institute and Department of Economics and Finance at Middle Tennessee State University

Peter J. Boettke

George Mason University - Department of Economics; Mercatus Center at George Mason University

Date Written: December 11, 2014

Abstract

We supplement the existing empirical literature on Fed independence with a contextualized episodic history to corroborate the empirical literature and inform future studies. We examine the postwar Fed to focus on the ability of the Fed to forge a monetary path independent of political influence in modern times. We find that the Fed regularly accommodates debt, succumbs to political pressures, and follows bureaucratic tendencies, compromising the Fed’s operational independence.

Keywords: Federal Reserve, central bank independence, monetary policy

JEL Classification: E50

Suggested Citation

Smith, Daniel J. and Boettke, Peter J., An Episodic History of Modern Fed Independence (December 11, 2014). The Independent Review: A Journal of Political Economy 20(1): 2015: 99-120. Available at SSRN: https://ssrn.com/abstract=2135233 or http://dx.doi.org/10.2139/ssrn.2135233

Daniel J. Smith (Contact Author)

Political Economy Research Institute and Department of Economics and Finance at Middle Tennessee State University ( email )

MTSU Box 190
1301 E. Main St.
Murfreesboro, TN 37132-0001
United States

HOME PAGE: http://www.danieljosephsmith.com/

Peter J. Boettke

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Mercatus Center at George Mason University ( email )

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Arlington, VA 22201
United States

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