Monetary Policy Signaling from Congress to the Federal Reserve
Chapters Four and Five provided evidence that the Administration directly influences monetary policy over time by informally signaling Federal Reserve officials. In contrast, although there is evidence in the literature of indirect Congressional influence in the form of a correlation between the liberal/conservative ranking of the Chair of the Senate Banking Committee and an ease/tightness bias in monetary policy (Grier, 1991), there is no evidence that informal signaling by Congresspersons has a similar direct effect on monetary policy (Havrilesky, 1988). For example, an index of signals from Congress to the Federal Reserve (SCFER) was constructed in the same way as the SAFER index in Chapter Two.
KeywordsInterest Rate Monetary Policy Federal Reserve Fund Rate Federal Fund Rate
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