Central Bank Independence and the Federal Reserve's New Operating Regime
23 Pages Posted: 19 Jan 2019 Last revised: 8 Jun 2020
Date Written: January 10, 2019
The Federal Reserve is subject to a greater degree of political influence under its new operating regime. We survey the relevant literature and describe 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: Suggested Citation