| Abstract: |
In this paper, we build on data on officials of the Federal Reserve System,
oral history repositories, and hitherto under-researched archival sources to
unpack the tortuous path toward crafting an institutional and intellectual
space for postwar economic analysis within the Board of Governors. We show
that growing attention to new macroeconomic research was a reaction to both
mounting external criticisms against the Fed’s decision-making process, and to
the spread of new macroeconomic theories and econometric techniques. We argue
that the rise of the number of PhD economists working at the Fed is a symptom
rather than a cause of this transformation. Key to our story are a handful of
economists from the Board of Governors’ Division of Research and Statistics
(DRS) who did not hold a PhD but envisioned their role as going beyond mere
data accumulation and got involved in large-scale macroeconometric model
building. We conclude that the divide between PhD and non-PhD economists may
not be fully relevant to understand both the shift in the type of economics
practiced at the Fed and the uses of this knowledge in the decision
making-process. Equally important was the rift between different styles of
economic analysis. |