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Balance Of Power In Monetary And Fiscal Policymaking And Its Effect On Economic Outcomes, Rachel Ng

Senior Theses and Projects

By analyzing the balance of power between key policymakers involved in restoring the economy back to health during two periods in history – the Nixon administration and the 2008 financial crisis –, my thesis reveals the detrimental effects the political business cycle has on the success of recovery. In the Nixon era, the evidence supports the notion that Nixon coerced Burns into lowering interest rates past Burns’ threshold, which exacerbated inflation and sent the economy into the dismal state of stagflation. Contrary to the popularly held belief that the Fed acts as an arm of the Treasury, Bernanke held his …