Fed Up: The Global Ascension of the Federal Reserve in the Era of Migration

Abstract

AbstractIn recent decades, the Federal Reserve has emerged as a global lender of last resort. In this article, we investigate whether the prospect of unwanted migration has driven lawmakers’ support for the Fed's increased international role. During an economic crisis, declines in investor confidence and capital flight to developed economies often cause economic hardship in the developing world, thus encouraging increased migration into advanced industrial economies. Concerned about voter opposition to increased immigration, immigration-averse policymakers of migrant-receiving states will seek ways to reduce the economic distress of migrant-sending states. To corroborate our argument, we analyze congressional voting on the “Audit the Fed” bills in the US House of Representatives from 2012 to 2015. Using the district-level foreign-born population as an indicator of migration pressure, our evidence suggests that anti-immigrant lawmakers are more likely to support the Federal Reserve's international initiatives when their districts face a disproportionately high level of migrant pressure.