Please join us on Tuesday, October 1, for a discussion with Peter Conti-Brown , Ph.D. candidate in History, to discuss "The Structure of Federal Reserve Independence."
LEGS, or "Law-Engaged Graduate Students," meets during the academic year to discuss a work in progress by one of our Graduate Associates. Academic papers, dissertation proposals, and dissertation chapters have been presented at these meetings, to an audience of fellow graduate students.
Peter's paper challenges two prevailing analyses of Federal Reserve independence: agency independence in administrative law, and central bank independence in the social sciences. He offers an alternative approach, the audience-mechanism framework, which examines Fed independence with reference to the variety of audiences that influence Fed policy through legal and non-legal mechanisms. Here is his abstract:
"A century after its founding, the Federal Reserve, with the ability to influence nearly every aspect of public and private economic life, is one of the most powerful agencies in the history of the American Republic. Legal scholars have, for the most part, not taken note. This article is an effort to remedy that lack of attention by exploring the arguable source of the Fed’s power, the institutional features that constitute its extraordinary independence. The article makes two contributions. First, it argues that the prevailing lenses for analyzing Fed independence—agency independence in administrative law and central bank independence in the social sciences—are insufficient to describe the many ways that Fed independence does and does not operate in practice. Instead, the article describes the structure of Fed independence by introducing a more comprehensive approach, called the audience-mechanism framework. That framework evaluates Fed independence by reference to the many audiences—inside and outside government, inside and outside the Federal Reserve System—that shape Fed policy via a collection of legal and non-legal mechanisms. The net effect of these mechanisms, vis-à-vis each audience, constitutes the Fed’s independence from that audience. Second, the article then illustrates the framework through a descriptive topography of Fed independence from private banks (and the Reserve Banks), the President (and the Treasury), and Congress, but also presents a preliminary map for evaluating independence from audiences such as other agencies, international central bankers, Fed career employees, and others. In the process of that descriptive topography, the article challenges widespread mischaracterizations about, for example, the nature of the Fed’s budgetary independence (which is not expressly authorized by statute), the consequences of the Governors’ fourteen-year terms (which are almost never served), the role of the Reserve Banks within the System, and other aspects of Fed independence that figure prominently in academic and policy discussions. The upshot of the audience-mechanism framework is that the spirited debates regarding Fed independence are essentially meaningless when that independence is not specified by audience and mechanism. The more theoretically comprehensive and descriptively accurate characterization that the audience-mechanism framework allows, then, is essential for academics and policy-makers engaged in debates about the nature of the Fed, its past, and, increasingly, its future."
Peter Conti-Brown is a PhD Candidate in Princeton's History Department and is an Academic Fellow (non-resident) at Stanford Law School's Rock Center for Corporate Governance. At Princeton, he focuses on financial, legal, and political history and plans to write a dissertation on the institutional evolution of the Federal Reserve System. In law, Conti-Brown researches and writes about banking, administrative law, and public finance, with a particular focus on the institutional features of central banking. His articles have appeared in the Stanford, UCLA, and Washington University Law Reviews, among other journals. He is also the editor, with David Skeel, of the book When States Go Broke: Origins, Context, and Solutions for the American States in Fiscal Crisis, published by Cambridge University Press. He has been quoted in print and online articles published by Reuters, The Economist, and The New York Times. Conti-Brown graduated from Harvard College, magna cum laude and Phi Beta Kappa, and Stanford Law School, and clerked for the Hon. Stephen F. Williams on the United States Court of Appeals for the DC Circuit and the Hon. Gerard E. Lynch on the United States Court of Appeals for the Second Circuit.