Allies or commitment devices? A model of appointments to the Federal Reserve

Keith E. Schnakenberg, Ian R. Turner, Alicia Uribe-McGuire

Research output: Contribution to journalArticlepeer-review


We present a model of executive-legislative bargaining over appointments to independent central banks in the face of an uncertain economy with strategic economic actors. The model highlights the contrast between two idealized views of Federal Reserve appointments. In one view, politicians prefer to appoint conservatively biased central bankers to overcome credible commitment problems that arise in monetary policy. In the other, politicians prefer to appoint allies, and appointments are well described by the spatial model used to describe appointments to other agencies. Both ideals are limiting cases of our model, which depend on the level of economic uncertainty. When economic uncertainty is extremely low, politicians prefer very conservative appointments. When economic uncertainty increases, politicians’ prefer central bank appointees closer to their own ideal points. In the typical case, the results are somewhere in between: equilibrium appointments move in the direction of politician's preferences but with a moderate conservative bias.

Original languageEnglish (US)
Pages (from-to)118-132
Number of pages15
JournalEconomics and Politics
Issue number2
StatePublished - Jul 2017


  • appointments
  • bargaining
  • central banks
  • formal theory
  • spatial model

ASJC Scopus subject areas

  • Economics and Econometrics


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