Does money influence research outcomes?  We’re used to hearing this question when it comes to pharmaceutical research and the same question is surely relevant to research in monetary economics.  Central banks like the Fed, the ECB, and the BoE do a lot of hiring, sponsor a lot of conferences, pay a lot of honoraria.  Might people be reluctant to bluntly criticize the hand that feeds them? 

My colleague David Levy once received a letter from Milton Friedman on just this topic, copied below (

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Key quote, Friedman in 1993: 
…[T]he Federal Reserve System…as I believe it, hires directly roughly half of all economists specializing in the field of money…I have no doubt that this is a major reason why the Federal Reserve, despite such a poor record of performance, has such a high public standing. 
My colleague Larry White has looked at another measure of the Fed’s potential influence: In Econ Journal Watch he tabulated how many of the editors at top monetary economics journals have had some institutional affiliation with the Fed. The answer: You already know, don’t you? Paper here.
Larry’s very good final sentence:
Fed-sponsored research generally adheres to a high level of scholarship, but it does not follow that institutional bias is absent or that the appropriate level of scrutiny is zero.