The Power of Appointment and Monetary Policy

  • Thomas Havrilesky


Previous chapters show that the Administration, Congress, and the banking industry signal their desires for monetary policy to Federal Reserve leaders and that these leaders periodically systematically respond. Nevertheless, even during the most blatant interludes of monetary policy signaling, Federal Reserve officials seldom complain publicly. They understand that politicians and bankers usually know where to draw the line. Politicians and bankers are aware of the private costs of too frequently appearing to pressure the Fed and central bankers and are aware of the private costs of appearing to succumb to these pressures. These costs arise because all signaling challenges central bank autonomy and, if excessive, threatens the symbiotic balance between the Administration, Congress and the financial services sector, as uncooperative principals on the one hand, and Federal Reserve officials, as agents on the other hand (see, for example, Alt 1991, or Woolley 1984). As seen in Chapter Six, the frequency of signaling is highly variable over time, depending on the degree of economic stress, interest group pressures because of that stress, and the viability of other means of influencing policy.2


Monetary Policy Federal Reserve Vote Behavior Opposition Party Federal Reserve System 
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Copyright information

© Springer Science+Business Media New York 1993

Authors and Affiliations

  • Thomas Havrilesky
    • 1
  1. 1.Duke UniversityDurhamUSA

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