ON-Lion Letter
In Central Bank Governance & Oversight Reform, new from the Hoover Institution, distinguished scholars and policymakers address key questions about the Federal Reserve.  Going beyond the widely talked about decision of whether to raise interest rates, they focus on a deeper set of questions, including how the Fed should make decisions, how the Fed should govern its internal decision-making processes, and what the trade-off is between greater Fed power and less Fed independence.

The book is co-edited by John H. Cochrane and Bradley Prize recipient John B. Taylor.  Cochrane is senior fellow at the Hoover Institution.  Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and the George P. Shultz Senior Fellow in Economics at Hoover.  He chairs Hoover's Working Group on Economic Policy, which is supported by The Lynde and Harry Bradley Foundation in Milwaukee.

Based on a conference last year, the book's contributors deal with whether central banks can both follow rule-based policy in normal times, but then implement a discretionary do-what-it-takes approach to stopping financial crises.  They evaluate the Federal Reserve Accountability and Transparency Act of 2014 and the Financial Regulatory Improvement Act of 2015, which would require the Fed to describe its monetary policy rule -- and, if and when it changed or deviated from its rule, explain the reasons.  They consider the best ways to structure a committee -- like the Federal Open Market Committee, which sets interest rates -- to make good decisions, as well as offer historical reflections on the governance of the Fed.

"The purpose of these conferences is not to sit and theorize about monetary policy but to shape and drive the discussion in order to influence public policy," according to Taylor.  "The passage of the Federal Oversight Reform and Modernization Act in Congress late last year is proof that the scholars and economists that have convened at these conferences during the past two years are making a significant impact on monetary reform."
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