Lijphart, C12 & C13Constitutions and Central Banks

Constitutions Rigidity v. Flexibility

Formal v. Informal Changes Replacement

Judicial Review

Amendment Processes Legislative Supremacy Intervening Elections Referendum or Other Requiements

Amending the US ConstitutionSource: http://texaspolitics.laits.utexas.edu/html/cons/features/0405_03/slide1.html

Central Banks What are they? What do they do?

Review: Fiscal Policy v. Monetary Policy Setting interest rates/control the money supply

Independence v. Dependence On whom? Significance?

Independence & Central Banks1. Appointment and Tenure

Length of term Dismissal?

2. Policy Formulation (influence on monetary and budgeting policy or not?)

3. Central Bank Objectives (degree of focus on price controls?)

4. Limitations on Lending (To central government only (and with control of terms) or lending to various levels of government and to private entities?)

What is the Federal Open Market Committee, and

what does it do?Source: http://www.federalreserve.gov/generalinfo/faq/faqfomc.htm

The Federal Open Market Committee (FOMC) is the monetary policymaking body of the Federal Reserve System. It is responsible for formulation of a monetary policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

What is the Federal Open Market Committee, and

what does it do?Source: http://www.federalreserve.gov/generalinfo/faq/faqfomc.htm The FOMC sets monetary policy by specifying the short-term objective for open market operations--purchases and sales of U.S. government and federal agency securities. Open market operations, the principal tool of monetary policy, affect the provision of reserves to depository institutions and, in turn, the cost and availability of money and credit in the U.S. economy.

What is the Federal Open Market Committee, and

what does it do?Source: http://www.federalreserve.gov/generalinfo/faq/faqfomc.htm

The FOMC also directs Federal Reserve operations in foreign currencies; such operations are coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.

What is the Federal Open Market Committee, and

what does it do?Source: http://www.federalreserve.gov/generalinfo/faq/faqfomc.htm The Federal Open Market Committee consists of twelve voting members:

the seven members of the Board of Governors and five of the twelve Federal Reserve Bank presidents. The president of the Federal Reserve Bank of New York serves on a continuous basis; the presidents of the other Reserve Banks serve one-year terms on a rotating basis beginning on January 1 of each year. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco.

All of the Reserve Bank presidents, even those who are not currently voting members, attend FOMC meetings, participate in the discussions, and contribute to the assessment of the economy and of policy options.

The Federal Reserve Board: The Board of GovernorsThe seven members of the Board of Governors of the Federal Reserve System

are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years, on February 1 of even-numbered years. A member who serves a full term may not be reappointed. A member who completes an unexpired portion of a term may be reappointed. All terms end on their statutory date regardless of the date on which the member is sworn into office.

The Chairman and the Vice Chairman of the Board are named by the President from among the members and are confirmed by the Senate. They serve a term of four years. A member's term on the Board is not affected by his or her status as Chairman or Vice Chairman.

Source: http://www.federalreserve.gov/bios/

Who are the Federal Reserve Bank presidents? Under the Federal Reserve Act, the president of a Federal Reserve Bank

is the chief executive officer of the Bank. He or she is appointed by the Bank's board of directors, with the approval of the Board of Governors, for a term of five years.

The terms of the presidents of the twelve Reserve Banks run concurrently, ending on the last day of February in years ending with 1 and 6 (for example, 2001, 2006, and 2011). The appointment of a president who takes office after a term has begun ends with the end of that term. A Reserve Bank president may be reappointed after serving a full term or a partial term. Reserve Bank presidents are subject to mandatory retirement upon becoming 65 years of age. However, a president initially appointed after age 55 may, at the option of the Bank’s board of directors, serve until attaining ten years of service in the office or age 70, whichever comes first.

Source: http://www.chicagofed.org/consumer_information/the_fed_our_central_bank.cfm