Abstract
The previous chapter considered the effects of executive branch signaling to and legislative branch threatening of the monetary authority. The present chapter will consider their causes. The first part of the Chapter investigates the causes of signaling; the latter part investigates the causes of threatening. It is reasonable to view the quantities of signaling or threatening to the Federal Reserve, as dependent variables, which, at a minimum, are conditioned on measures of the state of the economy as explanatory variables. This perspective is that of the standard reaction function. A conventional reaction function estimates how policymakers react to measures of the state of the economy as well as to other variables which reflect political or partisanship considerations. Therefore, reaction functions typically relate a policy instrument, as a dependent variable, to the state of the economy variables that the policymaker is ultimately seeking to affect.1
You see to it, no recession.
— Richard Nixon to Arthur Burns in February 1970 quoted in Donald Kettl Leadership at the Fed (1986)
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Havrilesky, T. (1993). The Causes of Signaling from the Administration and Threats from Congress to the Federal Reserve. In: The Pressures on American Monetary Policy. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-2228-4_7
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DOI: https://doi.org/10.1007/978-1-4757-2228-4_7
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