Recent policy rules legislation introduced in the House and Senate has attracted much attention—including in op-eds, blog posts, tweets, editorials, speeches, research papers, conferences and Congressional testimony over the past few years. A particular version of this legislation passed the full House of Representatives on November 19, 2015. It is entitled “Requirements for Policy Rules of the Federal Open Market Committee” and was passed as Section 2 of the Fed Oversight Reform and Modernization Act. There is debate about what the next steps will be.
In the meantime there is a useful statement in support of this legislation signed on to by a group of economists. The group includes Nobel Prize winners with seminal contributions to the field of macroeconomics, former senior economic policy officials—including several who have served as members of the Federal Open Market Committee, distinguished monetary historians and economists. The signatories—listed at the end of the statement—are Lars Peter Hansen, Robert Lucas, Edward Prescott, George Shultz, Robert Heller, Jerry Jordan, Athanasios Orphanides, William Poole, Michael Bordo, Michael Boskin, Charles Calomiris, Varadarajan Chari, John Cochrane, John Cogan, Steven Davis, Marvin Goodfriend, Gregory Hess, Peter Ireland, Mickey Levy, Bennett McCallum, Allan Meltzer, Gerald O’Driscoll, Lee Ohanian, and John Taylor.
The statement gives specific reasons why the legislation is needed.