Sunday, July 19, 2015

Zaring on How the Fed Makes Decisions


"Law and Custom on the Federal Open Market Committee" Free Download 
Law and Contemporary Problems, Vol. 78, No. 3, 2015

DAVID T. ZARINGUniversity of Pennsylvania - Legal Studies Department

The Federal Open Market Committee (FOMC), which controls the supply of money in the United States, may be the country’s most important agency. But there has been no effort to come to grips with its administrative law; this article seeks to redress that gap. The principal claim is that the FOMC’s legally protected discretion, combined with the imperatives of bureaucratic organization in an institution whose raison d’etre is stability, has turned the agency into one governed by internally developed tradition in lieu of externally imposed constraints. The article evaluates how the agency makes decisions through a content analysis of FOMC meeting transcripts during the period when Alan Greenspan served as its chair, and reviews the minimal legal constraints on its decisionmaking doctrinally.

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