Partisan Monetary Policies: Presidential Influence through the Power of Appointment

We investigate the channels through which partisan influence from a Presidential administration could affect monetary policy-making.Influence could be a result of direct Presidential pressure exerted on members of the Federal Open Market Committee (FOMC), or it could be a result of partisan considerations in Presidential appointments to the Board of Governors. To investigate these two channels of influence, we devise and apply a method for estimating parameters of monetary policy reaction functions that can vary across individual members of the FOMC Our results suggest that the appointments process is the primary mechanism by which partisan differences in monetary policies arise

Monetary Policy Preferences of Individual FOMC Members: A Content Analysis of the Memoranda of Discussion

The Memoranda of Discussion provide detailed records of Federal Open Market Committee (FOMC) meeting deliberations. Procedures are developed for coding the textual data in the Memoranda and assessing the reliability of those codings. The codings are then used in the estimation of parameters of individual FOMC members\u27 reaction functions. Data from the 1970 to 1976 period are employed in the estimation. In the future, similar methods could be used to analyze newly released transcripts of FOMC meetings held after 1976

Monetary Policy Signaling from the Administration to the Federal Reserve.

This paper develops an index of monetary policy signals from the Administration to the Federal Reserve based on articles which appeared in the Wall Street Journal in which Administration off icials express a desire for easier or tighter monetary policy. In reg ressions, the index has a significant effect on the money supply. In reaction functions, the index responds to variables which measure the state of the economy. Money growth does not respond to the same stat e-of-the-economy measures but does respond to signals from the Admini stration. Further evdience suggests that the index is Granger-causal with respect to the money supply. Copyright 1988 by Ohio State University Press.

The Influence of the Federal Advisory Council on Monetary Policy.

The Federal Advisory Council consists of twelve bankers, elected by Federal Reserve Bank directorates, who advise the Federal Open Market Committee every three months on their desired direction for monetary policy. This paper tests the conjecture that the Council's directives to the Committee contain information that predicts subsequent changes in interest rates and Committee directives. Regression equations and Granger causality tests do not disprove the conjecture. This is the first hard evidence of private interest group influence on monetary policy. Copyright 1990 by Ohio State University Press.