The Federal Reserve's Coalition in Congress

48 Pages Posted: 18 Jan 2015 Last revised: 22 Feb 2015

See all articles by J. Lawrence Broz

J. Lawrence Broz

University of California, San Diego (UCSD) - Department of Political Science

Date Written: February 20, 2015

Abstract

The Federal Reserve’s coalition in Congress changes over time with the mandate the Federal Reserve (Fed) is pursuing. When the Fed is fighting inflation, the Right supports it while the Left attacks it. When the Fed’s focus shifts to reviving employment, the coalitions reverse and the Left supports the Fed while the Right attacks it. I analyze a new dataset of all congressional legislative proposals since 1973 that would reduce the Fed’s political independence from Congress. I find that cosponsors of these “anti-Fed” proposals move from left to right as the Fed’s priority shifts from price stability to full employment. I also examine roll-call voting on an anti-Fed proposal that was approved in the House in 2012. Voting patterns on this “Audit the Fed” proposal reveal that the Fed’s congressional coalition is now solidly left-wing, with attacks emanating from the Right. This reflects a combination of macroeconomic conditions – reducing unemployment has been the Fed’s priority during the Great Recession – and the Right’s antipathy to the Fed’s support of foreign central banks during the financial crisis.

Keywords: Federal Reserve, politics of central banking, central bank independence, agency oversight

JEL Classification: E5, E6, P16, D73

Suggested Citation

Broz, J. Lawrence, The Federal Reserve's Coalition in Congress (February 20, 2015). Available at SSRN: https://ssrn.com/abstract=2551300 or http://dx.doi.org/10.2139/ssrn.2551300

J. Lawrence Broz (Contact Author)

University of California, San Diego (UCSD) - Department of Political Science ( email )

9500 Gilman Drive
Code 0521
La Jolla, CA 92093-0521
United States

HOME PAGE: http://pages.ucsd.edu/~jlbroz/

Register to save articles to
your library

Register

Paper statistics

Downloads
126
rank
220,906
Abstract Views
728
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information