Federal Reserve Structure and Economic Ideas

Michael Bordo and Edward Prescott

No 22-08, Working Papers from Federal Reserve Bank of Cleveland

Abstract: This essay was written in memory of Marvin Goodfriend for a Federal Reserve Bank of Richmond book called Essays in Honor of Marvin Goodfriend: Economist and Central Banker. We discuss his Carnegie-Rochester conference paper titled "The Role of a Regional Bank in a System of Central Banks." In that paper, Marvin argued that the Federal Reserve's decentralized structure allowed for competing ideas about monetary and banking policy to develop with the central bank. In our essay, we describe how Marvin demonstrated this argument during his long career at the Federal Reserve Bank of Richmond. We also describe the institutional developments that led to this competition, including reforms that Chairman William McChesney Martin made to the operation of the Federal Open Market Committee in the 1950s and the introduction of monetary policy ideas such as monetarism and rational expectations by the Reserve Banks.

Keywords: Federal Reserve structure; monetary policy; governance; Marvin Goodfriend (search for similar items in EconPapers)
JEL-codes: B0 E58 G28 H1 (search for similar items in EconPapers)
Pages: 14
Date: 2022-03-28
New Economics Papers: this item is included in nep-ban, nep-cba, nep-his, nep-hpe, nep-mac and nep-mon
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DOI: 10.26509/frbc-wp-202208

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