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The Federal Reserve as a Bureaucracy: An Examination of Expense-Preference Behavior

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  • Boyes, William J
  • Mounts, William Stewart
  • Sowell, Clifford

Abstract

In this paper, the Federal Reserve System is viewed as a bureaucracy with a bureau's incentive to increase expenses beyond the profit maximizing point. Moreover, the bureau consists of divisions, the district banks, that exhibit their own expense-prefer ence behavior. An empirical investigation of labor demand by the Boar d and district banks reported in this paper demonstrates that the Fed eral Reserve has engaged in expense-preference behavior and that the centralization of the monetary authority amplified this type of behav ior. Copyright 1988 by Ohio State University Press.

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  • Boyes, William J & Mounts, William Stewart & Sowell, Clifford, 1988. "The Federal Reserve as a Bureaucracy: An Examination of Expense-Preference Behavior," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 181-190, May.
    • Handle: RePEc:mcb:jmoncb:v:20:y:1988:i:2:p:181-90
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    Citations

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    Cited by:

    1. William J. Boyes & William Stewart Mounts JR & Clifford Sowell, 1998. "Monetary and Fiscal Constitutions and the Bureaucratic Behavior of the Federal Reserve," Public Finance Review, , vol. 26(6), pages 548-564, November.
    2. Boyes, William J. & Mounts, WM. Jr. & Sowell, Clifford & Payne, James E., 1996. "All politics is local: The effect of fiscal and monetary constitutions on economic policy," Journal of Macroeconomics, Elsevier, vol. 18(4), pages 657-678.
    3. Vaubel, Roland, 1997. "The bureaucratic and partisan behavior of independent central banks: German and international evidence," European Journal of Political Economy, Elsevier, vol. 13(2), pages 201-224, May.
    4. Loretta J. Mester, 2003. "Applying efficiency measurement techniques to central banks," Working Papers 03-13, Federal Reserve Bank of Philadelphia.
    5. Salter, Alexander W. & Smith, Daniel J., 2019. "Political economists or political economists? The role of political environments in the formation of fed policy under burns, Greenspan, and Bernanke," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 1-13.
    6. J.B Crihfield & J.H. Wood, 1995. "Private goals and monetary policy: inflation and resignations from the Federal Reserve Board," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 48(195), pages 441-460.
    7. 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.
    8. J.B Crihfield & J.H. Wood, 1995. "Private goals and monetary policy: inflation and resignations from the Federal Reserve Board," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 48(195), pages 441-460.

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