Lijphart, C12

1
Lijphart, C12 C13

• Constitutions and Central Banks

2
Constitutions

• Rigidity v. Flexibility
• Formal v. Informal Changes
• Replacement
• Judicial Review

3
Amendment Processes

• Legislative Supremacy
• Intervening Elections
• Referendum or Other Requiements

4
Amending the US ConstitutionSource
http//texaspolitics.laits.utexas.edu/html/cons/fe
atures/0405_03/slide1.html
5
(No Transcript)
6
(No Transcript)
7
(No Transcript)
8
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?

9
Independence Central Banks

• Appointment and Tenure
• Length of term
• Dismissal?
• Policy Formulation (influence on monetary and
  budgeting policy or not?)
• Central Bank Objectives (degree of focus on price
  controls?)
• Limitations on Lending (To central government
  only (and with control of terms) or lending to
  various levels of government and to private
  entities?)

10
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.

11
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.

12
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.

13
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.

14
The Federal Reserve Board The Board of Governors

• The 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/

15
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 Banks board of directors,
  serve until attaining ten years of service in the
  office or age 70, whichever comes first.

16
Source http//www.chicagofed.org/consumer_inform
ation/the_fed_our_central_bank.cfm
17
(No Transcript)