Abstract
The previous Chapter presented evidence that the Federal Reserve was responsive to monetary policy signaling from the executive branch at the. 05 level of statistical significance or better under the Chairmanships of: Arthur Burns when Richard Nixon was President and when Gerald Ford was President; Paul Volcker during the Jimmy Carter and first Ronald Reagan Administrations; and Alan Greenspan during the second Reagan Administration. One hypothesis to explain this pattern, introduced in the previous Chapter, is that the Federal Reserve is responsive to Administration desires in order to garner its support to resist Congressional threats to its prerogatives. On the whole, these periods were characterized by fairly highlevels of Congressional concern regarding the central bank’s budgetary authority, regulatory powers and monetary policy autonomy and secrecy.
We aren’t getting any signals from politicians. I can’t see any reason to deviate from current policy.
—Anonymous Federal Reserve official in the Wall Street Journal, July 21, 1980
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Havrilesky, T. (1995). Is Federal Reserve Responsiveness to Signaling Propelled by Congressional Threats or by Chairmen’s Allegiances?. In: The Pressures on American Monetary Policy. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0653-5_6
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DOI: https://doi.org/10.1007/978-94-011-0653-5_6
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