(My modest contributions are in the preface and a discussion of Paul Tucker's Chapter 1. I agree it would be nice to have a more rule-based approach to lender of last resort and bailout functions, but wouldn't lots of equity so you don't have to mop up so often be even better?)
This is part of an emerging series of monetary policy conferences at Hoover. Tomorrow we will have a conference on international monetary policy. Stay tuned...
How can we balance the central bank’s authority, including independence, with accountability and constraints? Drawn from a 2015 Hoover Institution conference, this book features distinguished scholars and policy makers’ discussing this and other key questions about the Fed. Going beyond the simple decision of whether to raise interest rates, they focus on a deeper set of questions, including, among others, How should the Fed make decisions? How should the Fed govern its internal decision-making processes? What is the trade-off between greater Fed power and less Fed independence? And how should Congress, from which the Fed ultimately receives its authority, oversee the Fed?The contents:
The contributors discuss, for instance, whether central banks can both follow rule-based policy in normal times but then take a discretionary, do-what-it-takes approach to stopping financial crises. They evaluate legislation, recently proposed in the U.S. House and Senate, that would require the Fed to describe its monetary policy rule and, if and when the Fed changed or deviated from its rule, explain the reasons. And they discuss to best ways to structure a committee—like the Federal Open Market Committee, which sets interest rates—to make good decisions, as well as offer historical reflections on the governance of the Fed and much more. They conclude with an important reminder: how important it is to have a “healthy separation between government officials who are in charge of spending and those who are in charge of printing money,” the most essential part of good governance.
By John H. Cochrane and John B. Taylor
Chapter 1: How Can Central Banks Deliver Credible Commitment and Be “Emergency Institutions”?
By Paul Tucker
Chapter 2: Policy Rule Legislation in Practice
By David H. Papell, Alex Nikolsko-Rzhevskyy and Ruxandra Prodan
Chapter 3: Goals versus Rules as Central Bank Performance Measures
By Carl E. Walsh
Chapter 4: Institutional Design: Deliberations, Decisions, and Committee Dynamics
By Kevin M. Warsh
Chapter 5: Some Historical Reflections on the Governance of the Federal Reserve
By Michael D. Bordo
Chapter 6: Panel on Independence, Accountability, and Transparency in Central Bank Governance
By Charles I. Plosser, George P. Shultz, and John C. Williams