Exploration Exercise: The Quest for Fiscal Policy

3. The president of the United States has the constitutional right to pardon people convicted of federal crimes. If we look at this power as an economist might, we probably would reason as follows. If someone deserves to be pardoned, that person should be pardoned as soon as the president is convinced that the pardon is deserved. If someone does not deserve to be pardoned, that pardon should never be granted. Hence, presidential pardons should occur randomly during the time a president is in office.

However, this timing is not what we observe. An unexpectedly large number of pardons are granted during the last few days that a president is in office. The economic view of the world must be missing something. What do you think it is?

4. In what ways is the Fed independent of the political process, and is that good? Summarize the point of view found at

<http://www.frbsf.org/system/fedsystem/monpol/structure.html> and <http://www.frbsf.org/system/fedsystem/monpol/goals.html>

5. The issue of central bank independence is also discussed in Europe. What is the point of view expressed in this speech?


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