Presidential Influence on the Federal Reserve in the 1970s

This research examined presidential influence on Federal Reserve monetary policy in the 1970s. A reaction function for the change in the Federal Funds rate was estimated and then checked to determine whether that reaction function shifted at politically important points. The two political influences studied were elections and administration. The Federal Reserve did not appear to manipulate the money supply in 1972 to aid President Nixon's reelection. The reaction function shifted between the Nixon and Ford administrations; it did not shift with the ascension of Carter, and it did not shift with the replacement of Chairman Arthur Burns by Chairman William Miller.