Monetary Policy and Presidential Elections: A Nonpartisan Political Cycle

This paper develops a Federal Reserve reaction function which relates policy intentions to forecasts of policy objectives. Pre- and postpresidential election estimates of this reaction function for the post-Accord period of 1953-1984 suggest two conclusions: (1) the Federal Reserve reacts differently to economic conditions in the pre- and postelection biennia and (2) these differences in Fed behavior are not likely the result of partisan political influence, but rather the result of self-restraint by the Fed during preelection periods.