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Fall 2016

ISSN 0890-913X

Volume 31, Number 3

Categories: Fall 2016 | Monetary policy

Public and Private Institutions in the Federal Reserve

Paul D. Mueller, The King's College, Manhattan

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TheJournalofPrivateEnterprise31(3),2016,49–68PublicandPrivateInstitutionsintheFederalReservePaulD.MuellerTheKing’sCollege,Manhattan�______________________________________________________AbstractThemixofpublicandprivategovernanceintheFederalReserveSystemmakesitaninterestingcaseofentangledpoliticaleconomy.DoesthegovernanceoftheBoardofGovernorsdiffersignificantlyfromthatofthedistrictbanks?Iarguethatitdoes.Besidestheirsignificantlydifferentorganizationalandaccountabilitystructures,IshowtwodistincttrajectoriesofgrowthforthedistrictbanksversustheBoardofGovernorsusingbudgetandemploymentdatafrom1987through2014.TheBoardofGovernorsseemstobepurelyagovernmentagency,whilethedistrictbanksaremuchmorelikeprivateentities.Ifdistrictbanksfaceincentivesandhaveinstitutionalfeaturesthatmakethemactlikeprivateentities—constraininggrowthinbudgetandemployment,developingandimplementingnewtechnology,andbeingresponsivetomarketfeedback—thenwecanexpectthemtoimplementbettermonetarypolicyandfinancialoversightthanthebureaucraticBoardofGovernorsdoes.______________________________________________________JELCodes:E50,E58,N22Keywords:FederalReserve,monetarypolicy,entangledpoliticaleconomy,districtbanks,BoardofGovernors“Monetarydevelopmentsduringthepastfewdecadeshave,Ibelieve,beendeterminedfarmorebytheinstitutionalstructureoftheFederalReserveandexternalpressuresthanbytheintentions,knowledge,orpersonalcharacteristicsofthepersonswhoappearedtobeincharge.”—MiltonFriedman(1985,p.4)I.TheFederalReserveandItsIndependenceSincethe2008financialcrisis,theFederalReserveSystemhashadanincreasinglyprominentroleinthefinancialmarkets.Overthepastsevenyears,theFedhasgrownsignificantlybothinsizeandinitsinfluenceovertheperformanceofvariousfinancialmarkets.�IthankJacobMueller,BrandonDupont,andananonymousrefereeforhelpfulcomments.Allremainingerrorsaremyown.

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Metadata [hide]

Title	Public and Private Institutions in the Federal Reserve
Authors/Creators:	Paul D. Mueller, The King's College, Manhattan
Year:	2016
Volume:	31
Number:	3
Pages:	49 - 68
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Federal Reserve, monetary policy, entangled political economy, district banks, Board of Governors

Citation:
Mueller, Paul D. / 2016. "Public and Private Institutions in the Federal Reserve." The Journal of Private Enterprise, 31(3): 49-68.