Case Analysis

Writing Assignment 2 – Case Analysis

Janae Cannon

University of Nebraska at Omaha

PA 2170 – 851

While reading this case, I feel like the real problem is not the Federal Reserve, but mainly trying to figure out which of the two Federal chairman: Greenspan or Bernanke; using the decision theories, would best help the decision making process of the Federal Reserve.

Alan Greenspan was the chairman of the Federal Reserve from 1987 to 2006, prided himself on his ability to confuse. During his era, meetings followed a routine agenda. The policymaking portion of the meeting began with a staff report on economic conditions and subsequent questioning and discussion by the Committee. According to the International Journal of Central Banking, the discussion was followed by an “economics go-around” in which Committee members presented personal assessments of economic conditions. In the economics go-around, District Reserve Bank presidents generally reported on anecdotal regional information, while governors assessed national conditions. The staff then presented a report describing policy options, and this was followed by a “policy go-around” in which Committee members described their own policy preferences. Chairman Greenspan typically spoke first in the policy go-around and offered a policy proposal that provided a frame of reference for subsequent speakers. After the policy go-around, the Chairman proposed final policy specifications, including both a target funds rate and a setting for the bias, for a formal vote.

From the outside, it seemed like during this era, Greenspan used the Group Decision Model: Collaborative, Consensus Decision Making. To me, collaboration means pooling of ideas and/or resources (e.g., information, money, etc.) by 2 or more stakeholders to solve a set of problems which neither can solve independently. This type of decision making can range from discussing problems, to reaching agreement on binding actions. In addition, decisions are made by...