Hostname: page-component-cd9895bd7-7cvxr Total loading time: 0 Render date: 2024-12-27T07:24:09.942Z Has data issue: false hasContentIssue false
  • English
  • Français

The Politics of Monetary Policy: A Critical Review*

Published online by Cambridge University Press:  28 November 2008

John T. Woolley
John T. Woolley
Affiliation:
Political Science, University of California, Santa Barbara
Get access Rights & Permissions [Opens in a new window]

Abstract

The Federal Reserve Bank of the United States is a pre-eminent banking institution, and an institution that has been subject to scrutiny from a wide variety of scholarly perspectives. The object of this article is to review prominent works dealing with the politics of the Federal Reserve, particularly its relations with other institutions and their effects on monetary policy. The review shows that the formal legal independence of a central bank such as the Fed does not mark the end of monetary politics, and its record suggests a greater measure of modesty and caution on the part of enthusiasts for independent central banks.

Type
Articles
Information
Journal of Public Policy , Volume 14 , Issue 1 , January 1994 , pp. 57 - 85
Copyright
Copyright © Cambridge University Press 1994

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Abrams, Richard K., Froyen, Richard, and Waud, Roger N. (1980) ‘Monetary Policy Reaction Functions, Consistent Expectations and the Burns Era.’ Journal of Money, Credit and Banking 12:30–42.CrossRefGoogle Scholar
Acheson, Keith and Chant, John (1973) ‘Bureaucratic Theory and the Choice of Central Bank Goals.’ Journal of Money, Credit and Banking 5:637–55.CrossRefGoogle Scholar
Akhtar, M.A. and Howe, Howard (1991) ‘The Political and Institutional Independence of U.S. Monetary Policy.” Banco Nationals del Lavoro Quarterly Review, no. 178 (September):343–71.Google Scholar
Alesina, Alberto and Grilli, Vittorio (1991) ‘The European Central Bank: Reshaping Monetary Politics in Europe.’ 1991. Prepared for CEPR-Georgetown University-IMF Conference on ‘The Creation of a Central Bank.’CrossRefGoogle Scholar
Alesina, Alberto and Summers, Lawrence (1993) ‘Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence.’ Journal of Money Credit and Banking 25 (May):151–62.CrossRefGoogle Scholar
Allen, Stuart D. and McCrickard, Donald L. (1991) ‘The Influence of Elections on Federal Reserve Behavior.’ Economics Letters 37:51–55.CrossRefGoogle Scholar
Alt, James E. (1985) ‘Political Parties, World Demand, and Unemployment’. American Political Science Review 79:1016–40.CrossRefGoogle Scholar
Alt, James E. (1991) ‘Leaning into the Wind or Ducking out of the Storm?’ In Politics and Economics in the Eighties, ed., Alesina, Alberto and Carliner, Geoffrey. Chicago: University of Chicago Press.Google Scholar
Alt, James E. and Woolley, John T. (1982) ‘Reaction Functions, Optimization and Politics: Modelling the Political Economy of Macroeconomic Policy’. American Journal of Political Science 26:709–40.CrossRefGoogle Scholar
Aufricht, Hans (1967) Central Banking Legislation. Washington, D.C.: International Monetary Fund.Google Scholar
Axelrod, Stephen H. (1985) ‘U.S. Monetary Policy in Recent Years: An Overview’ Federal Reserve Bulletin 71:14–24.Google Scholar
Bach, George L. (1950) Federal Reserve Policy-Making: A Study in Government Economic Policy Formation. New York: Alfred A. Knopf.Google Scholar
Bach, George L. (1971) Making Monetary and Fiscal Policy. Washington, D.C.: Brookings.Google Scholar
Bade, Robin and Parkin, Michael (1987) ‘Central Bank Laws and Monetary Policy’. Mimeo. Department of Economics, University of Western Ontario, June.Google Scholar
Beck, Nathaniel (1982) ‘Presidential Influence on the Federal Reserve in the 1970s.’ American Journal of Political Science 26:415–45.CrossRefGoogle Scholar
Beck, Nathaniel (1983) The Use of Time Varying Parameter Models in Political Science'. American Journal of Political Science 27:557–600.CrossRefGoogle Scholar
Beck, Nathaniel (1987) ‘Elections and the Fed: Is there a Political Monetary Cycle?” American Journal of Political Science 26:415–45.CrossRefGoogle Scholar
Beck, Nathaniel (1990a) ‘Congress and the Fed: Why the Dog Does not Bark in the Night.’ In Mayer.CrossRefGoogle Scholar
Beck, Nathaniel (1990b) ‘Political Monetary Cycles.’ in Mayer, Thomas, ed.CrossRefGoogle Scholar
Beck, Nathaniel (1991) ‘The Fed and the Political Business Cycle.’ Contemporary Policy Issues 9:25–38.CrossRefGoogle Scholar
Beck, Nathaniel (1992) ‘An Institutional Analysis of the Proposed European Central Bank with Comparisons to the U.S. Federal Reserve System.’ Department of Political Science, University of California, San Diego.Google Scholar
Berry, John M. (1993) ‘Seeking Control in Dizzying Money Game.’ Washington Post August 30, 1993.Google Scholar
Borins, Sanford (1972) ‘The Political Economy of ”the Fed”.’ Public Policy 20 (Spring): 175–98.Google Scholar
Buchan, David and Ridding, John (1994) ‘Trichet Outlines Vision of ”Open and Democratic” Independent Central Bank.’ Financial Times January 8, p. 2.Google Scholar
Burdekin, Richard C. K., Wihlborg, Clas and Willett, Thomas (1992) ‘A Monetary Constitution Case for an Independent European Central Bank.’ The World Economy, 231–49.CrossRefGoogle Scholar
Burdekin, Richard C. K. and Willett, Thomas D. (1991) ‘Central Bank Reform: The Federal Reserve in International Perspective.’ Public Budgeting and Financial Management 3:619–49.Google Scholar
Cannon, Bradley C. (1969) ‘Voting Behavior on the FCC.’ Midwest Journal of Political Science 13 (November) 587–612.CrossRefGoogle Scholar
Canterbury, E. Ray (1967) ‘A New Look at Federal Open Market Voting.’ Western Economic Journal 6:25–38.Google Scholar
Clifford, A. Jerome (1965) The Independence of the Federal Reserve System. Philadelphia: University of Pennsylvania Press.CrossRefGoogle Scholar
Cowart, Andrew (1978) ‘The Economic Policies of European Governments.’ British Journal of Political Science 8:285–311, 425–39.CrossRefGoogle Scholar
Cukierman, Alex (1992) Central Bank Strategy, Credibility, and Independence: Theory and Evidence. Cambridge, Mass.: MIT Press.Google Scholar
De Long, J. Bradford and Summers, Lawrence (1992) ‘Macroeconomic Policy and Long-Run Growth.’ Federal Reserve Bank of Kansas City Economic Review (Fourth Quarter) pp. 5–29.Google Scholar
Dewald, William G. and Johnson, Harry G. (1963) ‘An Objective Analysis of the Objectives of American Monetary Policy, 1952–61.’ In Carson, Deane, ed., Banking and Monetary Studies. Homewood, IL.: Richard D. Irwin.Google Scholar
Euromoney (1994) ‘Spain: Euromoney Guide to Currencies.’ Euromoney Supplement March 4.Google Scholar
Frieden, Jeffry A. (1991) ‘Invested Interests: The Politics of National Economic Policies in a World of Global Finance.’ International Organization 45:425–51.CrossRefGoogle Scholar
Friedman, Milton and Schwartz, Anna jacobson (1963) A Monetary History of the United States, 1960–1967. Princeton: Princeton University Press.Google Scholar
Gildea, John (1990) ‘Explaining FOMC Members’ votes.’ in Mayer.CrossRefGoogle Scholar
Goodman, John B. (1992) Monetary Sovereignty: The Politics of Central Banking in Western Europe. Ithaca: Cornell University Press.Google Scholar
Goodman, John B. and Pauly, Louis W. (1990) ‘The New Politics of International Capital Mobility.’ Paper Prepared for delivery at the 1990 Annual Meeting of the American Political Science Association,San Francisco, September.Google Scholar
Greider, William (1987) Secrets of the Temple. New York: Simon and Schuster.Google Scholar
Grier, Kevin (1989) ‘On the Existence of a Political Monetary Cycle.’ American Journal of Political Science 33:376–89.CrossRefGoogle Scholar
Grier, Kevin (1991) ‘Congressional Influence on U.S. Monetary Policy.’ Journal of Monetary Economics 28:201–20.CrossRefGoogle Scholar
Grilli, Vittorio, Masciandaro, Donate and Tabellini, Guide (1991) ‘Political and Monetary Institutions and Public Financial Policies in the Industrial Countries.’ Economic Policy 13:341–92.CrossRefGoogle Scholar
Havrilesky, Thomas (1967) ‘A Test of Monetary Policy Action.’ Joural of Political Economy 75:299–304.CrossRefGoogle Scholar
Havrilesky, Thomas (1988) ‘Monetary Signaling from the Administration to the Federal Reserve.’ Journal of Money, Credit, and Banking 19:308—25.CrossRefGoogle Scholar
Havrilesky, Thomas (1993) The Pressures on American Monetary Policy. Boston: Kluwer Academic Publishers.CrossRefGoogle Scholar
Havrilesky, Thomas and Gildea, John (1991) ‘Screening FOMC Members for the Biases and Dependability.’ Economics and Politics 3:139–150.CrossRefGoogle Scholar
Havrilesky, Thomas, Sapp, Robert and Schweitzer, Robert (1975) ‘A Test of the Federal Reserve's Reaction to the State of the Economy.’ Social Science Quarterly 55 (March):835–52.Google Scholar
Hetzel, Robert L. (1990) ‘The Political Economy of Monetary Policy.’ In Mayer.CrossRefGoogle Scholar
Hibbs, Douglas A. (1987) The American Political Economy: Macroeconomics and Electoral Politics. Cambridge, Mass.: Harvard University Press.CrossRefGoogle Scholar
Jensen, Michael (1989) ‘The Eclipse of the Public Corporation.’ Harvard Business Review.Google Scholar
Johnson, David R. and Siklos, Pierre L. (1992) ‘Empirical Evidence on the Independence of Central Banks.’ Department of Economics, Wilfrid Laurier University, Waterloo, Ontario.Google Scholar
Kane, Edward J. (1975) ‘New Congressional Restraints and Federal Reserve Independence.’ Challenge (November-December): 37–44.CrossRefGoogle Scholar
Kane, Edward J. (1982) ‘External Pressure and the Operations of the Fed.’ 1982. In Lombra, R. E. and Witte, W. E., eds., Political Economy of International and Domestic Monetary Relations.Google Scholar
Kane, Edward J. (1990) ‘Bureaucratic Self-interest as an Obstacle to Monetary Reform.’ In Mayer.CrossRefGoogle Scholar
Kettl, Donald (1986) Leadership at the Fed. New Haven: Yale University Press.Google Scholar
Khademian, Anne M. (1993) ‘Bureaucratic Missions and Program Design: Compliance Policy Autonomy at the Fed, the FDIC and the OCC.’ Presented at the annual meetings of the Midwest Political Science Association,Chicago.Google Scholar
Krause, George A. (1994) ‘Federal Reserve Policy Decision Making: Political and Bureaucratic Influences.’ American Journal of Political Science 38 (February): 124–44.CrossRefGoogle Scholar
Leloup, Lance T. and Woolley, John (1991) ‘Legislative Oversight of Monetary Policy in France, Germany, Great Britain, and the United States.’ In Legislatures and the Policy Process: The Dilemmas of Economic Policy, eds., Olson, David and Mezey, Michael. New York: Cambridge University Press.Google Scholar
Lewis, Michael (1989) Liars Poker: Rising Through the Wreckage on Wall Street. New York: Viking Penguin.Google Scholar
Luis, Jean-Victor (1989) Vers un Système Européen de Banques Centrales. Brussels: Institut d'Études européennes, Université libre de Bruxelles.Google Scholar
Maisel, Sherman J. (1973) Managing the Dollar. New York: W. W. Norton.Google Scholar
March, James G. and Olsen, Johan P. (1989) Rediscovering Institutions: The Organizational Basis of Politics. New York: Free Press.Google Scholar
Marsh, David (1992) The Most Powerful Bank: Inside Germany's Bundesbank. New York: Times Books.Google Scholar
Mayer, Thomas (1988) ‘Interpreting Federal Reserve Behavior.’ Journal of Behavioral Economics 17:263–77.CrossRefGoogle Scholar
Mayer, Thomas, ed. (1990) The Political Economy of American Monetary Policy. New York: Cambridge University Press.CrossRefGoogle Scholar
Meyers, Roy T. (1985) The Budgetary Status of the Federal Reserve Board. Washington, D.C.: Congressional Budget Office.Google Scholar
Morris, Irwin and Keech, William R. (1992) ‘Appointments, Presidential Power, and the Federal Reserve.’ Political Science Department, University of North Carolina.Google Scholar
Munger, Michael C. and Roberts, Brian E. (1990) ‘The Federal Reserve and its Institutional Environment: A Review.’ in Mayer, , ed.CrossRefGoogle Scholar
Myerson, R. (1982) ‘Optimal Coordination Mechanisms in Generalized Principal-Agent Problems.’ Journal of Mathematical Economics 10:67–81.CrossRefGoogle Scholar
Nordhaus, William (1975) ‘The Political Business Cycle.’ Review of Economic Studies 42 (April): 169–90.CrossRefGoogle Scholar
Nordhaus, William (1989) ‘Alternative Approaches to the Political Business Cycle.’ Brookings Papers on Economic Activity (2).CrossRefGoogle Scholar
Owen, David (1994) ‘Autonomy Hope for Bank Dashed.’ Financial Times January 29, p. 4.Google Scholar
Peterson, Paul and Rom, Mark (1988) ‘Macroeconomic Policymaking: Who Is In Control?’ In New Directions in American Politics, eds. Chubb, John and Peterson, Paul E.. Washington, D.C.: Brookings.Google Scholar
Quinn, Dennis and Shapiro, Robert Y. (1991) ‘Economic Growth Strategies: The Effects of Ideological Partisanship on Interest Rates and Business Taxation in the United States.’ American Journal of Political Science 35:656–85.CrossRefGoogle Scholar
Reagan, Michael D. (1961) ‘The Political Structure of the Federal Reserve System.’ American Political Science Review 55:64–76.CrossRefGoogle Scholar
Reserve Bank of New Zealand (1991) ‘Monetary Policy Statement.’ February.Google Scholar
Rom, Mark. Forthcoming. The Thrift Tragedy: Are Politicians and Regulators to Blame? Pittsburgh: University of Pittsburgh Press.Google Scholar
Rymes, Thomas K. (1993) ‘On the Coyne-Raminsky Directive and Responsibility for Monetary Policy in Canada.’ In Varieties of Monetary Reform: Lessons and Experience on the Road to Monetary Union. Boston: Kluwer Academic.Google Scholar
Scylla, Richard (1988) ‘The Autonomy of Monetary Authorities: The Case of the U.S. Federal Reserve System.’ In Central Banks' Independence in Historical Perspective, ed. Toniolo, Gianni. Berlin: Walter de Gruyter.Google Scholar
Siedentop, Larry (1992) ‘Models for Maastricht.’ Financial Times, August 8, p. 9.Google Scholar
Starobin, Paul (1993) ‘The Fed Tapes.’ The National Journal, December 18.Google Scholar
Toma, Mark (1991) ‘The Demise of the Public Interest Model of the Federal Reserve System.’ Journal of Monetary Economics 27:157–63.CrossRefGoogle Scholar
Vertzberger, Yaacov Y. I. (1990) The World in Their Minds: Information Processing, Cognition and Perception in Foreign Policy Decisionmaking. Stanford, CA: Stanford University Press.Google Scholar
Volcker, Paul A. and Gyohten, Toyo (1992) Changing Fortunes: The World's Money and the Threat to American Leadership. New York: Times Books.Google Scholar
Waller, Christopher (1992) ‘A Bargaining Model of Partisan Appointments to the Central Bank.’ Journal of Monetary Economics 29:411–28.CrossRefGoogle Scholar
Walsh, Carl E. (1994) ‘Is There a Cost to Having an Independent Central Bank?’ Federal Reserve Bank of San Francisco Weekly Letter February 4.Google Scholar
Weaver, R. Kent (1988) Automatic Government: The Politics of Indexation. Washington, D.C.: Brookings.Google Scholar
Weingast, Barry R. and Moran, Mark J. (1983) ‘Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission.’ Journal of Political Economy 91 (October): 765–800.CrossRefGoogle Scholar
Weintraub, Robert (1978) ‘Congressional Supervision of Monetary Policy.’ Journal of Monetary Economics 4 (April): 341–62.CrossRefGoogle Scholar
Wessel, David and Mitchell, Constance (1990) ‘Limited Leverage; Fed Has Lost Much of its Power to Sway U.S. Interest Rates.’ Wall Street Journal March 12, 1990, p. A1.Google Scholar
Whittlesey, C. R. (1963) ‘Power and Influence in the Federal Reserve System.’ Economica 45:123–35.Google Scholar
Wood, John H. (1967) ‘A Model of Federal Reserve Behavior.’ In Horwich, George, ed., Monetary Process and Policy. Homewood, IL.: Irwin.Google Scholar
Woolley, John T. (1977) ‘Monetary Policy Instrumentation and the Relationship of Central Banks and Governments.’ Annals of the American Academy of Political and Social Science 434 (November): 151–73.CrossRefGoogle Scholar
Woolley, John T. (1982) ‘Monetarists and the Politics of Monetary Policy.’ Annals of the American Academy of Political and Social Science 459 (January): 148–60.CrossRefGoogle Scholar
Woolley, John T. (1984) Monetary Politics: The Federal Reserve and the Politics of Monetary Policy. New York, Cambridge University Press.CrossRefGoogle Scholar
Woolley, John T. (1985) ‘Central Banks and Inflation: Influence and Independence.’ in The Political Economy of Inflation and Economic Stagnation, Lindberg, Leon N. and Maier, Charles S., eds. Washington, D.C.: The Brookings Institution, 318–51.Google Scholar
Woolley, John T. (1988) ‘Partisan Manipulation of the Economy: Another Look at Monetary Policy with Moving Regression.’ Journal of Politics 50:335–60.CrossRefGoogle Scholar
Woolley, John T. (1992) ‘1992, Capital, and the EMS: Policy Credibility and Political Institutions.’ in Sbragia, Alberta, ed., European Political Institutions after 1992. Washington, D.C.: Brookings, pp. 157–90.Google Scholar
Woolley, John T. (1993) ‘Conflict Among Regulators and the Hypothesis of Congressional Dominance.’ Journal of Politics 55 (February): 92–114.CrossRefGoogle Scholar
Woolley, John T. and Leloup, Lance (1989) ‘The Adequacy of the Electoral Motive in Explaining Legislative Attention to Monetary Policy: A Comparative Study.’ Comparative Politics 22 (October):63–82.CrossRefGoogle Scholar
Yohe, William P. (1966) ‘A Study of Federal Open Market Committee Voting.’ Southern Economic Journal 12:396–405.CrossRefGoogle Scholar