Shadow Open Market Committee

The Shadow Open Market Committee (SOMC) is an independent, monetarist economic analysis committee founded in 1973 by Profs. Karl Brunner, from the University of Rochester, and Allan Meltzer, from Carnegie Mellon University, named after the Federal Open Market Committee (FOMC), of which it is often critical. Its members are drawn both from academia and the private sector.

The Committee was founded at a time when many monetarist economists believed the Federal Reserve—and the alleged dominance of new Keynesians within the Fed[1]—had caused a recession by failing to keep money supply growth steady,[2] and advocates that the Fed change its procedures to tighten its control of M-1.[3] Throughout the 1970s and 1980s, the Committee's biannual studies consistently blamed the Fed for contributing to the inflation of that period.[4] After 1982, the SOMC was critical of the Fed's return to short-term interest rate targeting, which it believed would further inflation.[5]

The Committee also opposes the targeting of monetary policy on the exchange rate.[6]

Statistical analysis of the SOMC's policy recommendations and the FOMC's actions through 1995 indicated that the SOMC had little influence on FOMC directives.[7]

Undersecretary for Monetary Affairs Beryl Sprinkel was a long-time member of the SOMC.[8]

There are similar shadow committees in Europe, Latin America, and Japan.[9] The SOMC is viewed as somewhat of a model for those who advocate completely non-governmental central banks.[10]

Current members

References

  1. ^ Coats, Alfred William. 1993. The Sociology and Professionalization of Economics. Routledge. ISBN 0415067162. p. 615.
  2. ^ Wells, Wyatt C. 1994. Economist in an Uncertain World: Arthur F. Burns and the Federal Reserve, 1970-78. Columbia University Press. ISBN 023108496X. p. 149.
  3. ^ Tobin, James. 1989. Policies for Prosperity: Essays in a Keynesian Mode. MIT Press. ISBN 0262700360. p. 156.
  4. ^ Shull, Bernard. 2005. The Fourth Branch: The Federal Reserve's Unlikely Rise To Power And Influence. Praeger/Greenwood. ISBN 1567206247. p. 144.
  5. ^ Shull, 2005, p. 175.
  6. ^ Hennnig, Randall C. 1994. Currencies and Politics in the United States, Germany, and Japan. Peterson Institute. ISBN 0881321273. p. 287.
  7. ^ Havrilesky, Thomas M. 1995. The Pressures on American Monetary Policy. Springer. ISBN 0792395611. p. 272.
  8. ^ Dominguez, Kathryn Mary, and Frankel, Jeffrey A. 1993. Does Foreign Exchange Intervention Work?. Peterson Institute. ISBN 0881321044. p. 9.
  9. ^ Martin, Preston. 2003. The Complete Idiot's Guide to the Federal Reserve. Alpha Books. ISBN 0028643232. p. 286.
  10. ^ Calverley, John P. 2004. Bubbles and How To Survive Them. Nicholas Brealey Publishing. ISBN 1857883489. p. 168.

External links