Partisan Monetary Policies: Presidential Influence through the Power of Appointment.

The authors investigate the channels through which partisan influence from a presidential administration could affect monetary policy-making. Influence could be a result of direct presidential pressure exerted on members of the Federal Open Market Committee or it could be a result of partisan considerations in presidential appointments to the Board of Governors. To investigate these two channels of influence, the authors devise and apply a meth od for estimating parameters of monetary policy reaction functions that can vary across individual members of the Federal Open Market Committee. Their results suggest that the appointments process is the primary mechanism by which partisan differences in monetary policies arise. Copyright 1993, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.