Central Bank Independence and the Federal Reserve's New Operating Regime

20 Pages Posted: 19 Jan 2019 Last revised: 10 Jun 2019

See all articles by Jerry L. Jordan

Jerry L. Jordan

Federal Reserve Banks - Federal Reserve Bank of Cleveland; American Institute for Economic Research

William J. Luther

Florida Atlantic University; American Institute for Economic Research

Date Written: January 10, 2019

Abstract

The Federal Reserve is subject to a greater degree of political influence under its new operating regime. We provide a brief survey of the relevant literature and a clear description of the Fed's new operating regime. Then we explain how the regime change reduced central bank independence. In brief, the regime change increased the appointment power of the President and improved the bargaining power of Congress. We offer some suggestions for bolstering independence at the Fed.

Keywords: Central Bank, Central Bank Independence, Federal Reserve, Monetary Policy, Political Economy

JEL Classification: H11, E42, E52, E58, P16

Suggested Citation

Jordan, Jerry L. and Luther, William J., Central Bank Independence and the Federal Reserve's New Operating Regime (January 10, 2019). AIER Sound Money Project Working Paper No. 2019-07. Available at SSRN: https://ssrn.com/abstract=3313068 or http://dx.doi.org/10.2139/ssrn.3313068

Jerry L. Jordan

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

William J. Luther (Contact Author)

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States

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

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

HOME PAGE: http://www.aier.org/staff/william-j-luther

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