- Shadow Open Market Committee
The Shadow Open Market Committee (SOMC) is an independent, monetarist economic analysis committee founded in 1973 by Profs.
Karl Brunner, from the University of Rochester, and Allan Meltzer, from Carnegie Mellon University, named after the Federal Open Market Committee(FOMC), of which it is often critical. Its members are drawn both from academia and the private sector.
The Committee was founded at a time when many monetarist economists believed the
Federal Reserve—and the alleged dominance of new Keynesians within the Fed [Coats, Alfred William. 1993. "The Sociology and Professionalization of Economics". Routledge. ISBN 0415067162. p. 615.] —had caused a recessionby failing to keep money supplygrowth steady, [Wells, Wyatt C. 1994. "Economist in an Uncertain World: Arthur F. Burns and the Federal Reserve, 1970-78". Columbia University Press. ISBN 023108496X. p. 149.] and advocates that the Fed change its procedures to tighten its control of M-1. [Tobin, James. 1989. "Policies for Prosperity: Essays in a Keynesian Mode". MIT Press. ISBN 0262700360. p. 156.] Throughout the 1970s and 1980s, the Committee's biannual studies consistently blamed the Fed for contributing to the inflationof that period. [ Shull, Bernard. 2005. "The Fourth Branch: The Federal Reserve's Unlikely Rise To Power And Influence". Praeger/Greenwood. ISBN 1567206247. p. 144.] After 1982, the SOMC was critical of the Fed's return to short-term interest rate targeting, which it believed would further inflation. [Shull, 2005, p. 175.]
The Committee also opposes the targeting of
monetary policyon the exchange rate. [Hennnig, Randall C. 1994. "Currencies and Politics in the United States, Germany, and Japan". Peterson Institute. ISBN 0881321273. p. 287.]
Statistical analysis of the SOMC's policy recommendations and the FOMC's actions through 1995 indicated that the SOMC had little influence on FOMC directives. [Havrilesky, Thomas M. 1995. "The Pressures on American Monetary Policy". Springer. ISBN 0792395611. p. 272.]
Undersecretary for Monetary Affairs Beryl Sprinkel was a long-time member of the SOMC. [Dominguez, Kathryn Mary, and Frankel, Jeffrey A. 1993. "Does Foreign Exchange Intervention Work?". Peterson Institute. ISBN 0881321044. p. 9.]
There are similar shadow committees in
Europe, Latin America, and Japan. [Martin, Preston. 2003. "The Complete Idiot's Guide to the Federal Reserve". Alpha Books. ISBN 0028643232. p. 286.] The SOMC is viewed as somewhat of a model for those who advocate completely non-governmental central banks. [Calverley, John P. 2004. "Bubbles and How To Survive Them". Nicholas Brealey Publishing. ISBN 1857883489. p. 168.]
Charles Plosser, Co-Chair, University of Rochester
Anna Schwartz, Co-Chair NBER
Gregory Hess, Claremont McKenna College
W. Lee Hoskins, Pacific Research Institute
Mickey Levy, Bank of America
Bennett McCallum, Carnegie-Mellon University
Alan Stockman, University of Rochester
* [http://www.somc.rochester.edu/ Official Website]
* [http://www.somc.rochester.edu/SOMCOriginsApr00.pdf History of the SOMC, according to Meltzer]
Wikimedia Foundation. 2010.