Document Type

Article

Publication Date

10-1998

Publication Source

Journal of Law and Economics

Abstract

We construct an empirical model of U.S. monetary policy assuming that the Federal Reserve is an ordinary federal bureaucracy. We use the real Federal Funds rate as our policy measure and show the existence of significant executive, legislative, and bureaucratic influence on the real rate of interest from 1961 to 1996. We find that presidential party is an adequate statistical measure of executive influence and that the voting scores of the Senate Banking Committee leadership best represent legislative influence. We argue that political changes cause systematic and predictable changes in monetary policy.

Inclusive pages

409-428

ISBN/ISSN

0022-2186

Comments

Permission documentation is on file.

Publisher

The University of Chicago Press

Volume

41

Issue

2

Place of Publication

Chicago, IL

Peer Reviewed

yes