Shifting Mandates: The Federal Reserve's First Centennial
American Economic Review
vol. 103,
no. 3, May 2013
(pp. 48-54)
Abstract
The Federal Reserve's mandate has evolved considerably over the organization's hundred-year history. It was changed from an initial focus in 1913 on financial stability, to fiscal financing in World War II and its aftermath, to a strong anti-inflation focus from the late 1970s, and then back to greater emphasis on financial stability since the Great Contraction. Yet, as the Fed's mandate has expanded in recent years, its range of instruments has narrowed, partly based on a misguided belief in the inherent stability of financial markets. We argue for a return to multiple instruments, including a more active role for reserve requirements.Citation
Reinhart, Carmen M., and Kenneth S. Rogoff. 2013. "Shifting Mandates: The Federal Reserve's First Centennial." American Economic Review, 103 (3): 48-54. DOI: 10.1257/aer.103.3.48Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E44 Financial Markets and the Macroeconomy
- E58 Central Banks and Their Policies
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation
- N11 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: Pre-1913
- N12 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: 1913-