Causation and Consequences in Monetary Policy: Are Federal Reserve Policies Based on an Inadequate Theory of Causal Responsibility?

This article enters the debate among central bankers, finance ministers and monetary theorists regarding the circumstances under which the dominant central bank is properly considered causally responsible for the adverse consequences of its monetary policy actions. Analyzing both the criticisms of the Federal Reserve for its QE (Quantitative Easing) and ZIRP (Zero Interest Rate Policy) policies and the Fed responses, this inquiry uses the categories of philosophers Hart, Honore, Feinberg, Davidson and others to demonstrate the different theories of causation at work and address the question of which idea of causal responsibility is most appropriate in monetary policy contexts.