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What's Wrong With the Federal Reserve: What Would Restore Independence?

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  • Allan H Meltzer

Abstract

The actual degree of independence of the Federal Reserve has varied over the years. This paper traces its history and finds that the Federal Reserve has been most successful in its dual full-employment, low inflation mandate when it follows fixed rules, and focuses on the intermediate term rather than trying to react to short-term developments under political pressure. Going forward, monetary policy should emphasize on annual monetary growth more and short-term interest rates less. A number of policies are recommended to support this overall emphasis on intermediate-term stability.

Suggested Citation

  • Allan H Meltzer, 2013. "What's Wrong With the Federal Reserve: What Would Restore Independence?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 48(2), pages 96-103, April.
    • Handle: RePEc:pal:buseco:v:48:y:2013:i:2:p:96-103
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    Cited by:

    1. Barry Eichengreen & Arnaud J. Mehl & Livia Chițu & Gary Richardson, 2014. "Mutual Assistance between Federal Reserve Banks, 1913-1960 as Prolegomena to the TARGET2 Debate," NBER Working Papers 20267, National Bureau of Economic Research, Inc.
    2. Richard S. Grossman & Hugh Rockoff, 2015. "Fighting the Last War: economists on the lender of last resort," Departmental Working Papers 201515, Rutgers University, Department of Economics.
    3. Jordan, Jerry L. & Luther, William J., 2022. "Central bank independence and the Federal Reserve's new operating regime," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 510-515.

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