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Monetary Policy Signaling from the Administration to the Federal Reserve

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  • Havrilesky, Thomas

Abstract

This paper develops an index of monetary policy signals from the Administration to the Federal Reserve based on articles which appeared in the Wall Street Journal in which Administration off icials express a desire for easier or tighter monetary policy. In reg ressions, the index has a significant effect on the money supply. In reaction functions, the index responds to variables which measure the state of the economy. Money growth does not respond to the same stat e-of-the-economy measures but does respond to signals from the Admini stration. Further evdience suggests that the index is Granger-causal with respect to the money supply. Copyright 1988 by Ohio State University Press.

Suggested Citation

  • Havrilesky, Thomas, 1988. "Monetary Policy Signaling from the Administration to the Federal Reserve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 83-101, February.
  • Handle: RePEc:mcb:jmoncb:v:20:y:1988:i:1:p:83-101
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    References listed on IDEAS

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    1. Barro, Robert J., 1986. "Reputation in a model of monetary policy with incomplete information," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 3-20, January.
    2. Kenneth S. Rogoff, 1983. "The optimal degree of commitment to an intermediate monetary target: inflation gains versus stabilization costs," International Finance Discussion Papers 230, Board of Governors of the Federal Reserve System (U.S.).
    3. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    4. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    5. Horn, Henrik & Persson, Torsten, 1988. "Exchange rate policy, wage formation and credibility," European Economic Review, Elsevier, vol. 32(8), pages 1621-1636, October.
    6. Backus, David & Driffill, John, 1985. "Inflation and Reputation," American Economic Review, American Economic Association, pages 530-538.
    7. Drew Fudenberg & Jean Tirole, 1983. "Sequential Bargaining with Incomplete Information," Review of Economic Studies, Oxford University Press, vol. 50(2), pages 221-247.
    8. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
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    Cited by:

    1. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    2. Jakob De Haan & Jan Egbert Sturm, 1992. "The Case for Central Bank Independence," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 45(182), pages 305-327.
    3. Niklas Potrafke, 2017. "Government Ideology and Economic Policy-Making in the United States," CESifo Working Paper Series 6444, CESifo Group Munich.
    4. Ansgar Belke & Niklas Potrafke, 2009. "Does Government Ideology Matter in Monetary Policy? – A Panel Data Analysis for OECD Countries," Ruhr Economic Papers 0094, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Belke, Ansgar & Potrafke, Niklas, 2012. "Does government ideology matter in monetary policy? A panel data analysis for OECD countries," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 1126-1139.
    6. Daniel J. Richards, 1993. "What inflation policy do American voters want, and do they get it?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 33-44.
    7. Beckmann, Joscha & Ademmer, Esther & Belke, Ansgar & Schweickert, Rainer, 2017. "The political economy of the impossible trinity," European Journal of Political Economy, Elsevier, vol. 47(C), pages 103-123.
    8. Arora, Harjit K. & Smyth, David J., 1995. "Presidential regimes and the federal reserve's accommodation of federal budget deficits," The North American Journal of Economics and Finance, Elsevier, vol. 6(1), pages 53-63.
    9. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    10. repec:zbw:rwirep:0094 is not listed on IDEAS
    11. Mixon, Franklin Jr. & Upadhyaya, Kamal P., 2004. "Examining legislative challenges to central bank autonomy: macroeconomic and agency costs models," Journal of Economics and Business, Elsevier, vol. 56(5), pages 415-428.
    12. repec:hal:journl:hal-01291401 is not listed on IDEAS
    13. Geoffrey M. B. Tootell, 1991. "Are district presidents more conservative than board governors?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-12.
    14. Garcia De Paso, Jose I., 2000. "Partisan Appointments to the Central Bank: Policy Uncertainty and the Democratic Deficit," Journal of Macroeconomics, Elsevier, vol. 22(3), pages 471-489, July.
    15. Chopin, Marc C. & Cole, C. Steven & Ellis, Michael A., 1996. "Congressional influence on U.S. monetary policy: A reconsideration of the evidence," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 561-570, December.
    16. Havrilesky, Thomas, 1995. "Restructuring the Fed," Journal of Economics and Business, Elsevier, vol. 47(2), pages 95-111, May.
    17. Thomas Havrilesky, 1994. "Outside Influences On Monetary Policy: A Summary Of Recent Findings," Contemporary Economic Policy, Western Economic Association International, vol. 12(1), pages 46-51, January.
    18. Susan Belden, 1991. "Rationale For Dissent: The Case Of Fomc Members," Contemporary Economic Policy, Western Economic Association International, vol. 9(3), pages 59-70, July.

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