By Kelly H. Chang
Targeting how the President and the Senate effect financial coverage via appointing Federal Reserve Board individuals, this booklet solutions 3 questions about the appointment procedure and its results. First, do politicians effect financial coverage through Federal Reserve appointments? moment, who affects the process--only the President or the President and the Senate? 3rd, how is the constitution of the Federal Reserve appointment strategy defined? The research extends the research of the Federal Reserve Board to the ecu critical financial institution.
Read or Download Appointing Central Bankers: The Politics of Monetary Policy in the United States and the European Monetary Union (Political Economy of Institutions and Decisions) PDF
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Extra info for Appointing Central Bankers: The Politics of Monetary Policy in the United States and the European Monetary Union (Political Economy of Institutions and Decisions)
Although there has been much concern regarding the negative effects of these countries on monetary policy, the analysis in Chapter 5 shows that the power of one country with extreme inﬂation preferences is limited to conditions when all countries agree on the direction of policy change. But this is rare, and most of the time, the status quo prevails, and as Chapter 5 shows, that was the case in 1999 when EMU began. At the time, the status quo was of relatively tight policy, and thus the institutions created by the EMU founders guaranteed that Italy, Spain, and Portugal, assuming that they wanted to, could not disproportionately inﬂuence policy in order to produce easier policy.
Depending on the economic situation, the same median point can mean raising interest rates ﬁfty basis points or lowering them twenty-ﬁve basis points. The context will translate the median point to the real policy at a particular point in time. Essentially, the foregoing is an application of the RR (1978) setter game in which one player is a majority rule body and the starting point is the median. In this setup, the median always prevails, although this is not the case if the median is not the starting point.
If the chair is to the left of the sixth member, he cannot obtain any point to the left of the range’s midpoint, because the seventh member would reject that point. The seventh member would be better off with the status quo because it guarantees that at least some draws of the median are right of the midpoint, closer to her ideal point. 16 Third, the empirical evidence for chair agenda-setting power is mixed at best. If the chair has much agenda-setting power, his voting weight should be higher compared to that of the other members.