The Transformation of Economic Analysis at the Federal Reserve during the 1960s

Center for the History of Political Economy at Duke University Working Paper Series, 2019-04

54 Pages Posted: 6 Feb 2019

See all articles by Juan Acosta

Juan Acosta

University of Lille I, Faculty of Economic and Social Sciences, Department of Economics and Management

Beatrice Cherrier

CNRS; University of Cergy-Pontoise - THEMA

Multiple version iconThere are 2 versions of this paper

Date Written: January 29, 2019

Abstract

In this paper, we build on data on Fed officials, oral history repositories, and hitherto under-researched archival sources to unpack the torturous path toward crafting an institutional and intellectual space for postwar economic analysis within the Federal Reserve. We show that growing attention to new macroeconomic research was a reaction to both mounting external criticisms against the Fed’s decision making process and a process internal to the discipline whereby institutionalism was displaced by neoclassical theory and econometrics. We argue that the rise of the number of PhD economists working at the Fed is a symptom rather than a cause of this transformation. Key to our story are a handful of economists from the Board of Governors’ Division of Research and Statistics (DRS) who paradoxically did not always held a PhD but envisioned their role as going beyond mere data accumulation and got involved in large-scale macroeconometric model building. We conclude that the divide between PhD and non-PhD economists may not be fully relevant to understand both the shift in the type of economics practiced at the Fed and the uses of this knowledge in the decision making-process. Equally important was the rift between different styles of economic analysis.

Suggested Citation

Acosta, Juan and Cherrier, Beatrice, The Transformation of Economic Analysis at the Federal Reserve during the 1960s (January 29, 2019). Center for the History of Political Economy at Duke University Working Paper Series, 2019-04 . Available at SSRN: https://ssrn.com/abstract=3325084 or http://dx.doi.org/10.2139/ssrn.3325084

Juan Acosta (Contact Author)

University of Lille I, Faculty of Economic and Social Sciences, Department of Economics and Management ( email )

Villeneuve D'Ascq Cedex, 59655
France

Beatrice Cherrier

CNRS ( email )

3, rue Michel-Ange
Paris, 75794
France

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011
France

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