BUF 3193 Barnhart
Chapter 9 Home Assignment
1. Does the chairman of the Federal Reserve truly “run the show”? Explain why or why not.
a. The chairman of the Federal Reserve does indeed run the show, as they are mostly in charge of handling negotiations with Congress and the POTUS. The chairman is also in charge of setting the agenda of the Board and FOMC meetings. Besides these powers, a lot of a chairman’s power comes from their force of stature and personality. The chairman also supervises the Board’s staff of professional economists and advisers. In addition, several appointments in the past to the
Board itself have come from within the ranks of its professional staff.
2. Name and explain Stanley Fisher’s two types of independence for central banks?
Does this Fed have either of these? Explain.
a. Stanley Fisher has defined two different types of independence for central banks.
The first type is instrument independence, which is the ability of the central bank to set monetary policy instruments. The second type is goal independence, which is the ability of the central bank to set the goals of monetary policy. The Fed has both of these types of independence, as seen in their power of setting monetary policy instruments and setting its goals as well. It is also seen in the goals of the
American government to have its checks and balances and give the Federal
Reserve some political freedom from Congress or the President.
3. List and briefly describe four arguments that justify the degree of independence currently enjoyed by