Volcker said that he has been thinking for years about the need for this type of institute.
While the recent problems within the Obama administration at the Internal Revenue Service and the Justice Department did not provide a catalyst, those challenges "underscore the relevance that government’s execution of its policies has on the lives of its citizens," he said.
Volcker, who was chairman of the Fed from 1979-1987, named former White House budget official official Shelley Metzenbaum as the group's president.
The group intends to work with a broad range of officials to sponsor research on government performance, make recommendations for policy development and implementation and provide a forum to discuss ideas and delve into avenues to strengthen policy execution across governments, according to the statement.
Volcker said the group will "endeavor to rekindle intellectual, practical, and academic interest in the implementation of policy, the ‘nuts and bolts’ of governance."
Board members include Bill Donaldson, former chairman of the Securities and Exchange Commission under President George W. Bush, and Alice Rivlin, founding director of the Congressional Budget Office and director of the President Clinton's budget office.