For more than 70 years, a strand of Keynesian thought has maintained that the cure for economic depressions is merely a matter of simple arithmetic. According to these Keynesians, the government need only increase spending by an amount equal to the ratio of the output gap to the fiscal...

Until about 1984, the U.S. monetary base typically grew at an accelerating rate. Since then, that acceleration has stopped. Modern evidence suggests that the Federal Reserve responds to political pressure. The authors present empirical evidence supporting the hypothesis that reduced monetary...

We construct an empirical model of U.S. monetary policy assuming that the Federal Reserve is an ordinary federal bureaucracy. We use the real Federal Funds rate as our policy measure and show the existence of significant executive, legislative, and bureaucratic influence on the real rate of...