Political Selection of Federal Reserve Bank Cities

Jac Heckelman and John H. Wood ()
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John H. Wood: Wake Forest University

Chapter Chapter 6 in Public Choice Analyses of American Economic History, 2018, pp 135-153 from Springer

Abstract: Abstract The Federal Reserve Act (1913) established the Reserve Board Organization Committee (RBOC) to determine the number and location of Federal Reserve districts and Reserve banks. Some scholars argue that the decisions were politically motivated but direct econometric evidence is lacking. A regression model utilizing solely political variables correctly predicts 11 of the 12 selected cities; the exception being Cleveland’s selection over Cincinnati. Our results present direct evidence of the importance of political determinants for RBOC selection.

Date: 2018
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DOI: 10.1007/978-3-319-77592-0_6

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