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THE TRANSFORMATION OF ECONOMIC ANALYSIS AT THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM DURING THE 1960S

Published online by Cambridge University Press:  30 June 2021

Juan Acosta*
Affiliation:
Juan Acosta, Universidad de los Andes, jcaacostamacia@gmail.com
Beatrice Cherrier
Affiliation:
Beatrice Cherrier, CNRS and ENSAE, Ecole Polytechnique, IP Paris, beatrice.cherrier@ensae.fr.
*Corresponding
Corresponding author. jcaacostamacia@gmail.com

Abstract

In this paper, we build on data on officials of the Federal Reserve System, oral history repositories, and hitherto underresearched archival sources to unpack the tortuous path toward crafting an institutional and intellectual space for postwar economic analysis within the Board of Governors of the Federal Reserve System. We show that growing attention to new macroeconomic research was a reaction to both mounting external criticisms against the Fed’s decision-making process and the spread of new macroeconomic theories and econometric techniques. We argue that the rise of the number of PhD economists working at the Fed is a symptom rather than a cause of this transformation. Key to our story are a handful of economists from the Board of Governors’ Division of Research and Statistics (DRS) who did not hold a PhD but envisioned their role as going beyond mere data accumulation and got involved in large-scale macroeconometric model building. We conclude that the divide between PhD and non-PhD economists may not be fully relevant to understand both the shift in the type of economics practiced at the Fed and the uses of this knowledge in the decision-making process. Equally important was the rift between different styles of economic analysis.

Type
Research Article
Copyright
© The History of Economics Society, 2021

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Footnotes

We would like to thank Pedro Duarte, Roger Backhouse, Paul Dudenhefer, James Forder, Ariane Dupont-Kieffer, Kevin Hoover, Robert Hetzel, participants in the 2018 History of Recent Economics Conference and in Duke’s CHOPE seminar, and one anonymous referee for their respective comments on various versions of this paper. We are also grateful to the archivists at FRASER, the Rubinstein Library at Duke University, and the Rockefeller Archive Center for their help. The usual caveats apply.

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