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The Liberals’ New Hero

Guy Sorman | 04/23/2013

This article originally appeared in City Journal

It’s not every day that an academic work, written by a French economist and published by a university press, is celebrated as a “watershed book,” but this is what commentators are saying about Thomas Piketty’s Read more...

Chazen Institute

The Politics of Banking

Diana Furchtgott-Roth | 04/18/2014
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Making Central Banks More Resistant to Political Pressures and Fads

Charles W. Calomiris | April 14, 2014

This paper was presented April 13, 2014 at the International Monetary Fund’s Spring 2014 Meetings, in the session entitled “Can or Should Central Banks Remain Fully Independent Despite a Wider Mandate and Considerable Fiscal Pressure?”

Over the first 100 years of Federal Reserve System history, the United States enjoyed both price stability and the absence of banking crises in only about a quarter of those years. Allan Meltzer’s (2003, 2009, 2010) three volume history of the Fed (and the voluminous literature on Fed history published before and since)[1] document that two main influences explain persistent Fed failure: politicization of Fed decisions (especially to elicit Fed assistance in accomplishing short-term fiscal or electoral objectives of the Administration), and model misspecification (reflecting the limits of Fed knowledge about the economy).

Reforming the Rules That Govern the Fed

Charles W. Calomiris | March 17, 2014


The Fed has achieved both of its central objectives – price stability and financial stability – in only about a quarter of its years of operation. What reforms would be likely to improve that performance? This article focuses on two problems that have plagued the Fed throughout its history: adherence to bad ideas, especially to influence from intellectual fads in macroeconomics, which have produced major policy errors; and politicization of the Fed, which leads it to pursue objectives other than price stability and financial stability. Several reforms are proposed to the structure and governance of the Fed, and its policy mandates, which would promote greater diversity of thought and independence from political pressures, which in turn would insulate the Fed from political pressures and make its thinking less susceptible to intellectual fads.

The Relevance of Federal Reserve Surplus Capital for Current Policy

Marvin Goodfriend | March 17, 2014


Surplus capital is employed in commercial enterprises as a reserve for contingencies such as absorbing losses or meeting expenses and dividends when earnings are low. The Fed has employed its surplus capital in a similar manner. Prior to the 2007-09 credit turmoil, the most important contingencies were exchange rate revaluations of foreign-currency-denominated securities that the Fed held for its own account. Since these have been marked to market on a regular basis, an appreciation of the foreign exchange value of the dollar would reduce the dollar value of the Fed’s foreign-security holdings


Economics21 Event with Vanderbilt University Professor Brian Fitzpatrick and Center for Class Action Fairness Founder & President Ted Frank. 

The Spring 2014 Shadow Open Market Committee Meeting featured six papers and a presentation by Martin Feldstein, the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. Discussion centered around the future of the...

City Journal associate editor Matthew Hennessey and Jared Meyer, policy analyst at Economics21, discuss movie tax credits.