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What is the origin of the structural independence of the Federal Reserve System? Unlike existing explanations on central bank independence, we show that the structural independence of the Fed is not the result of intentional design but a product of compromise among disparate groups. Using...
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-bias arises due to the lobbying pressures of outsiders. Furthermore, we show that if lobbying pressures are high enough, an … feature of lobbying pressures has an impact on the stabilization properties of monetary policy. When a supply shock occurs …, the shock is totally absorbed by a forward-looking trade-union which has no costs of lobbying, independently of any finite …
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