December 11, 2014

An Episodic History of Modern Fed Independence

  • Peter J. Boettke

    Director, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Daniel J. Smith

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The authors supplement the existing empirical literature on Fed independence with a contextualized episodic history to corroborate the empirical literature and inform future studies. They examine the postwar Fed to focus on the ability of the Fed to forge a monetary path independent of political influence in modern times. They find that the Fed regularly accommodates debt, succumbs to political pressures, and follows bureaucratic tendencies, compromising the Fed’s operational independence.