Somc

Key Takeaways

• The SOMC evaluates Federal Reserve actions and a wide range of economic policies.
• Founded in 1973 by professors, the SOMC is also known as the Shadow Fed.
• The committee includes academics and former policymakers to inform policy debates.
• SOMC meetings result in policy statements summarizing key recommendations.
• The partnership with E21 enhances their economic policy research efforts.

What Is the Shadow Open Market Committee (SOMC)?

The Shadow Open Market Committee (SOMC) was created by university professors Karl Brunner and Allan Meltzer in 1973 to evaluate Federal Reserve policy. It is comprised of members drawn from both academic institutions and private organizations. It currently has nine members, eight of whom are currently academics and some of whom also have past practical experience working in the Federal Reserve or other central banks.1

As its name implies, its original purpose was to evaluate the policy and actions of the Federal Reserve Bank's Federal Open Market Committee (FOMC), the body in the Fed responsible for deciding on monetary policy action. Over the years, the SOMC has broadened its scope to evaluate a wide range of economic policy issues. The SOMC is sometimes also referred to as the Shadow Fed.

How the Shadow Open Market Committee (SOMC) Works

The issues the Committee analyzes cover a wide range of macroeconomic and public policy-related issues, from monetary policy and fiscal policy to international trade and tax policy. Many of the position papers published by the Committee tend to focus on monetary policy or other central bank policy considerations. The SOMC intends that its analyses and publications about policy will help inform the wider policy debate, including among journalists and the public, and thereby help improve policy.

The SOMC has formally entered into a partnership with E21, another independent economic policy research organizatio

The Methodology and Meetings of the Shadow Open Market Committee

It has a formal approach to its work: it meets regularly (on a semi-annual basis), and each meeting discusses papers that have been prepared on various policy issues by members. Following discussion of the contents of these, the SOMC releases a Policy Statement that summarizes the most important policy recommendations of the Committee.

The SOMC puts out position papers that the public can read. Based on these papers and the Committee’s deliberations, a policy statement is prepared that summarizes the most important policy recommendations of the Committee. At the March 2021 meeting, for instance, topics of discussion focused on the impact of monetary policy on the labor market, which featured distinguished speakers from top academic institutions to a former Philly Fed president.2