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Private Sector Influences on Monetary Policy in the United States


  • Earlier versions of this paper were presented at the Gettysburg College Department of Economics Brown Bag Seminar and the 2007 Eastern Economics Association meetings. Stacy Hannings and Pooja Pokhrel did substantial work on earlier versions of this paper. I thank two anonymous referees for their helpful suggestions. All errors and omissions are my own.


I examine the extent to which the Federal Reserve's monetary policy actions are correlated with the expressed wishes of private sector lobbying groups. I update and extend work by Havrilesky (1990, 1993) regarding the effect of signals from the banking industry through the Federal Advisory Council (FAC). I also construct a new database containing statements from non-financial interest groups. I find that monetary policy actions are correlated with signals from non-financial groups before 1979 but not after, and are correlated with signals from the FAC after 1979 but not before. I also find that the Fed's policy stance more closely matches the preferred stance of the banking industry after 1979.

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