The Fed Chairman as a Political Executive

Abstract

Regulatory agencies are governed by a top committee rather than a single, chief executive, but the chair of the committee (or board) often dominates decisions. This article addresses the question of why the Federal Reserve Board chairman dominates the decisions of the Federal Open Market Committee—the monetary policy arm of the Fed-even though he has little formal authority. It examines four internal strategies of the chair: side payments, policy trade-offs, use of expert staff and control of policy implementation. The article concludes with a discussion of the implications of these strategies for the conduct of monetary policy.