Cheryl Schonhardt-Bailey and Andrew Bailey
- Published in print:
- 2013
- Published Online:
- May 2014
- ISBN:
- 9780262019576
- eISBN:
- 9780262314725
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262019576.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter uses interviews with participants from both the FOMC and congressional banking committees to provide context and understanding of the motivations of central bankers and politicians as ...
More
This chapter uses interviews with participants from both the FOMC and congressional banking committees to provide context and understanding of the motivations of central bankers and politicians as they discuss monetary policy. Among the many findings is that deliberation can adjust and alter the preferences of individual FOMC members, though this usually occurs over a series of meetings rather than within the space of a single meeting. With regard to congressional oversight of monetary policy, Congress is perceived to be constrained by specific institutional features—particularly, (1) the electoral incentives of members (which limit their ability and time to learn from deliberation), (2) the lack of technical expertise in monetary policy, (3) the extreme transparency of the oversight hearings, and (4) the large membership size of the House and Senate banking committees. In short, the finding is that Congress as an institution for holding monetary policy makers to account is limited at best.Less
This chapter uses interviews with participants from both the FOMC and congressional banking committees to provide context and understanding of the motivations of central bankers and politicians as they discuss monetary policy. Among the many findings is that deliberation can adjust and alter the preferences of individual FOMC members, though this usually occurs over a series of meetings rather than within the space of a single meeting. With regard to congressional oversight of monetary policy, Congress is perceived to be constrained by specific institutional features—particularly, (1) the electoral incentives of members (which limit their ability and time to learn from deliberation), (2) the lack of technical expertise in monetary policy, (3) the extreme transparency of the oversight hearings, and (4) the large membership size of the House and Senate banking committees. In short, the finding is that Congress as an institution for holding monetary policy makers to account is limited at best.
Cheryl Schonhardt-Bailey
- Published in print:
- 2013
- Published Online:
- May 2014
- ISBN:
- 9780262019576
- eISBN:
- 9780262314725
- Item type:
- book
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262019576.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
American monetary policy is formulated by the Federal Reserve and overseen by Congress. Both policy making and oversight are deliberative processes, although the effect of this deliberation has been ...
More
American monetary policy is formulated by the Federal Reserve and overseen by Congress. Both policy making and oversight are deliberative processes, although the effect of this deliberation has been difficult to quantify. This book provides a systematic examination of deliberation on monetary policy from 1976 to 2008 by the Federal Reserve’s Open Market Committee (FOMC) and House and Senate banking committees. The innovative account employs automated textual analysis software to study the verbatim transcripts of FOMC meetings and congressional hearings; these empirical data are supplemented and supported by in-depth interviews with participants in these deliberations. The automated textual analysis measures the characteristic words, phrases, and arguments of committee members; the interviews offer a way to gauge the extent to which the empirical findings accord with the participants’ personal experiences. Decade after decade, Fed chairman after Fed chairman, one feature is evident in the discourse between central bankers and US legislators: Fed chairmen tend to talk about the technicalities of monetary policy while senators and representatives talk about other things, such as jobs, fiscal policy, energy policy, education, and so on. All too often they simply talk past one another. Analyzing why and under what conditions deliberation matters for monetary policy in the FOMC, the book identifies several strategies of persuasion used by committee members, including Paul Volcker’s emphasis on policy credibility and efforts to influence economic expectations.Less
American monetary policy is formulated by the Federal Reserve and overseen by Congress. Both policy making and oversight are deliberative processes, although the effect of this deliberation has been difficult to quantify. This book provides a systematic examination of deliberation on monetary policy from 1976 to 2008 by the Federal Reserve’s Open Market Committee (FOMC) and House and Senate banking committees. The innovative account employs automated textual analysis software to study the verbatim transcripts of FOMC meetings and congressional hearings; these empirical data are supplemented and supported by in-depth interviews with participants in these deliberations. The automated textual analysis measures the characteristic words, phrases, and arguments of committee members; the interviews offer a way to gauge the extent to which the empirical findings accord with the participants’ personal experiences. Decade after decade, Fed chairman after Fed chairman, one feature is evident in the discourse between central bankers and US legislators: Fed chairmen tend to talk about the technicalities of monetary policy while senators and representatives talk about other things, such as jobs, fiscal policy, energy policy, education, and so on. All too often they simply talk past one another. Analyzing why and under what conditions deliberation matters for monetary policy in the FOMC, the book identifies several strategies of persuasion used by committee members, including Paul Volcker’s emphasis on policy credibility and efforts to influence economic expectations.
