This paper examines the performance of the past five Federal Reserve chairmen using optimal control techniques and a macroeconometric model. Each chairman is judged by the actual performance of the economy under his term relative to what the performance would have been had he behaved optimally. Comparing chairmen only on the bases of actual performance of the economy is not appropriate because it does not control for different exogenous-variable values and shocks that the Fed has no control over. The results suggest that Greenspan was indeed the best, but followed closely by Martin. Volcker also does well, but probably not quite as well as Greenspan and Martin."
Wednesday, November 01, 2006
SSRN-A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best? by Ray Fair
SSRN-A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best? by Ray Fair: