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Full-Text Articles in Social and Behavioral Sciences
Just How Independent Is The Fed?, Brenton Swenson, Sven Wilson
Just How Independent Is The Fed?, Brenton Swenson, Sven Wilson
FHSS Mentored Research Conference
The Federal Reserve has a duel mandate to fight inflation while keeping unemployment low. The Fed is designed to be largely independent from political influence. Just how independent the Fed actually is remains an open question. According to Political Business Cycle Theory, presidents who want to maximize their chances for re-election will attempt to fight inflation early in their term, while allowing inflation to rise before the election with the goal of boosting the economy.