Partisan Monetary Policies: Presidential Influence through the Power of Appointment

We investigate the channels through which partisan influence from a Presidential administration could affect monetary policy-making.Influence could be a result of direct Presidential pressure exerted on members of the Federal Open Market Committee (FOMC), or it could be a result of partisan considerations in Presidential appointments to the Board of Governors. To investigate these two channels of influence, we devise and apply a method for estimating parameters of monetary policy reaction functions that can vary across individual members of the FOMC Our results suggest that the appointments process is the primary mechanism by which partisan differences in monetary policies arise