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Private Sector Influences on Monetary Policy in the United States

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  • CHARLES L. WEISE

Abstract

I examine the extent to which the Federal Reserve's monetary policy actions are correlated with the expressed wishes of private sector lobbying groups. I update and extend work by Havrilesky (1990, 1993) regarding the effect of signals from the banking industry through the Federal Advisory Council (FAC). I also construct a new database containing statements from non-financial interest groups. I find that monetary policy actions are correlated with signals from non-financial groups before 1979 but not after, and are correlated with signals from the FAC after 1979 but not before. I also find that the Fed's policy stance more closely matches the preferred stance of the banking industry after 1979. Copyright (c)2008 The Ohio State University.

Suggested Citation

  • Charles L. Weise, 2008. "Private Sector Influences on Monetary Policy in the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 449-462, March.
    • Handle: RePEc:mcb:jmoncb:v:40:y:2008:i:2-3:p:449-462
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    1. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 147-180.
    2. Froyen, Richard T. & Waud, Roger N., 2002. "The determinants of Federal Reserve policy actions: A re-examination," Journal of Macroeconomics, Elsevier, vol. 24(3), pages 413-428, September.
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    4. Havrilesky, Thomas, 1990. "The Influence of the Federal Advisory Council on Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(1), pages 37-50, February.
    5. Saeki, Manabu & Shull, Steven A., 2003. "Who Influences the Fed? Presidential Versus Congressional Leadership," Journal of Public Policy, Cambridge University Press, vol. 23(3), pages 261-278, September.
    6. Froyen, Richard T. & Havrilesky, Thomas & Waud, Roger N., 1997. "The Asymmetric Effects of Political Pressures on U.S. Monetary Policy," Journal of Macroeconomics, Elsevier, vol. 19(3), pages 471-493, July.
    7. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    8. Athanasios Orphanides, 2002. "Monetary-Policy Rules and the Great Inflation," American Economic Review, American Economic Association, vol. 92(2), pages 115-120, May.
    9. Boschen, John F & Mills, Leonard O, 1995. "The Relation between Narrative and Money Market Indicators of Monetary Policy," Economic Inquiry, Western Economic Association International, vol. 33(1), pages 24-44, January.
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    Cited by:

    1. Charles L. Weise, 2012. "Political Pressures on Monetary Policy during the US Great Inflation," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 33-64, April.
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    3. Benjamín García & Arsenios Skaperdas, 2024. "Central Bank Independence at Low Interest Rates," Working Papers Central Bank of Chile 1003, Central Bank of Chile.
    4. Weise, Charles L, 2008. "Political constraints on monetary policy during the Great Inflation," MPRA Paper 8694, University Library of Munich, Germany.
    5. Mengyang Guo & Xiaoran Jia & Justin Yiqiang Jin & Kiridaran Kanagaretnam & Gerald J. Lobo, 2023. "Expansionary Monetary Policy and Bank Loan Loss Provisioning," JRFM, MDPI, vol. 17(1), pages 1-35, December.
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    7. Dan OLTEANU, 2011. "A Survey On The Drivers And Mechanisms Of Financial Crises," Romanian Journal of Economics, Institute of National Economy, vol. 33(2(bis)(42), pages 73-100, December.

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