Technocratic Pragmatism, Bureaucratic Expertise, and the Federal Reserve.

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Date: Jan. 2021
From: Yale Law Journal(Vol. 130, Issue 3)
Publisher: Yale University, School of Law
Document Type: Article
Length: 29,353 words
Lexile Measure: 1680L

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Abstract :

The Federal Reserve (Fed) regularly faces novel challenges to its broad statutory mandates. Often, these challenges--from financial crises to pandemics to climate change--raise a critical question. When should the Fed act beyond the boundaries of its core institutional identity and expertise? On the one hand, some voices demand the Fed "stay in its own lane," avoiding experimentation so that it may preserve its perceived legitimacy to carry out core historical functions. On the other, hewing too closely to precedent and existing expertise risks institutional failure of a different sort. To navigate that tension, this Feature sketches an ethos of technocratic pragmatism--one that permits the Fed to develop the expertise necessary to address emergent problems as long as it remains constrained by norms designed to preserve its long-run legitimacy. We illustrate the ethos by examining three cases where the Fed has confronted, or is confronting, challenges that test the boundaries of its expertise: engagement with cyber risk, emergency lending before and during the COVID-19 pandemic, and nascent efforts to understand the intersection of central banking and global climate change. We also engage with cases where the Fed has transgressed legitimacy-preserving limits by intervening in policy disputes beyond the range of its statutory concerns. Taken together, these cases illustrate how the Fed must walk a fine line between valuable experimentation and the usurpation of politics. AUTHORS. Peter Conti-Brown is Assistant Professor at the Wharton School of the University of Pennsylvania and Nonresident Fellow in Economics Studies at the Brookings Institution. David A. Wishnick is Academic Fellow at the University of Pennsylvania Law School Center for Technology, Innovation & Competition. We thank Brian Feinstein, Jeff Gordon, Bill Laufer, David Schleicher, Katharina Pistor, David Zaring, and participants at the Third Conference on Law & Macroeconomics for helpful conversations on this paper and Edwin Bogert for excellent research assistance. We also thank the editors of the Yale Law Journal and especially Jonathan Liebman and Sumer Ghazala for their scholarly editorial support.

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Gale Document Number: GALE|A655542501