Federal Reserve Transparency: Accountability or its Opposite?

• In Event: 571 - Section on Economic Sociology Roundtables (one-hour)
  In Refereed Roundtable: Table 09. The Political Economy of Liberalization and Development

Abstract

Once known for its secrecy, the United States Federal Reserve has made remarkable moves towards transparency over the past two decades. Yet to what extent does transparency insure that an institution is accountable to government or the public? In this paper I focus on two aspects of transparency: the publication of pieces of information that were previously kept secret, and the adoption of intentional media practices to increase communication with the public. I argue that these have been adopted for two reasons: i) policymakers have few tools available while interest rates are near zero, and are using communication to performatively to influence market outcomes and ii) policymakers are responding to external pressures for accountability. Adopting voluntary disclosure is an attempt to maintain control over which information has to be divulged. The Fed’s communications practices therefore represent an attempt to gain public support for its policies while avoiding accountability.

Author

• Alexandra Holmstrom-Smith, University of California-Los Angeles