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The Biases of Federal Reserve Bank Presidents

Author

Listed:
  • Havrilesky, Thomas
  • Gildea, John

Abstract

This paper develops statistical tests that show that, in Federal Open Market Committee voting, Federal Reserve bank presidents, as a group, prefer less expansionary monetary policy than Federal Reserve board members. Further tests show that a subset of Federal Reserve bank presidents vote in a manner that is consistent with the partisanship of the U.S. president during whose term they were appointed. Membership in this subset is highly correlated with a career as an economist. These results have implications for reforms that would alter the voting power of bank presidents on the Federal Open Market Committee. Copyright 1995 by Oxford University Press.

Suggested Citation

  • Havrilesky, Thomas & Gildea, John, 1995. "The Biases of Federal Reserve Bank Presidents," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 274-284, April.
    • Handle: RePEc:oup:ecinqu:v:33:y:1995:i:2:p:274-84
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    1. repec:hal:journl:hal-04670309 is not listed on IDEAS
    2. Ellen Meade, 2006. "Dissent and Disagreement on the Fed's FOMC: Understanding Regional Affiliations and limits to Transparency," DNB Working Papers 094, Netherlands Central Bank, Research Department.
    3. Eichler, Stefan & Lähner, Tom & Noth, Felix, 2016. "Regional Banking Instability and FOMC Voting," VfS Annual Conference 2016 (Augsburg): Demographic Change 145803, Verein für Socialpolitik / German Economic Association.
    4. Petra Gerlach-Kristen & Ellen E. Meade, 2010. "Is There a Limit on FOMC Dissents? Evidence from the Greenspan Era," Working Papers 2010-16, American University, Department of Economics.
    5. Bennani, Hamza & Kranz, Tobias & Neuenkirch, Matthias, 2018. "Disagreement between FOMC members and the Fed’s staff: New insights based on a counterfactual interest rate," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 139-153.
    6. Gambacorta, Leonardo, 2003. "Asymmetric bank lending channels and ECB monetary policy," Economic Modelling, Elsevier, vol. 20(1), pages 25-46, January.
    7. Agnès Bénassy-Quéré & Edouard Turkisch, 2005. "ECB Governance in an Enlarged Eurozone," Working Papers 2005-20, CEPII research center.
    8. repec:bla:jcmkts:v:47:y:2009:i::p:25-53 is not listed on IDEAS
    9. Hamza Bennani, 2016. "Measuring Monetary Policy Stress for Fed District Representatives," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 156-176, May.
    10. Marcus Drometer & Thomas Siemsen & Sebastian Watzka, 2018. "The Monetary Policy of the ECB: Caring for the Weakest Links," Kyklos, Wiley Blackwell, vol. 71(4), pages 537-556, November.
    11. Thomas L. Hogan, 2022. "The calculus of dissent: Bias and diversity in FOMC projections," Public Choice, Springer, vol. 191(1), pages 105-135, April.
    12. Agnès Bénassy‐Quéré & Edouard Turkisch, 2009. "The ECB Governing Council in an Enlarged Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 47(1), pages 25-53, January.
    13. Hayo, Bernd & Neuenkirch, Matthias, 2013. "Do Federal Reserve presidents communicate with a regional bias?," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 62-72.
    14. Chappell, Henry Jr. & Havrilesky, Thomas M. & McGregor, Rob Roy, 1995. "Policymakers, institutions, and central bank decisions," Journal of Economics and Business, Elsevier, vol. 47(2), pages 113-136, May.
    15. Lähner, Tom, 2015. "Inconsistent voting behavior in the FOMC," Hannover Economic Papers (HEP) dp-546, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    16. Stefan Eichler & Tom Lähner, 2014. "Regional House Price Dynamics And Voting Behavior In The Fomc," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 625-645, April.
    17. Randall W. Bennett & Christine Loucks, 1996. "Politics And Length Of Time To Bank Failure: 1986–1990," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 29-41, October.
    18. Eichler, Stefan & Lähner, Tom & Noth, Felix, 2018. "Regional banking instability and FOMC voting," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 282-292.
    19. Bennani, Hamza & Farvaque, Etienne & Stanek, Piotr, 2018. "Influence of regional cycles and personal background on FOMC members’ preferences and disagreement," Economic Modelling, Elsevier, vol. 68(C), pages 416-424.
    20. Smales, Lee A. & Apergis, Nick, 2016. "The influence of FOMC member characteristics on the monetary policy decision-making process," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 216-231.
    21. Rex Pjesky & Daniel Sutter, 2002. "Searching for cincinnatus: Representatives' backgrounds and voting behavior," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 74-86, March.
    22. H.J. Roelfsema, 2006. "Why are Federal Central Banks more Activist?," Working Papers 06-06, Utrecht School of Economics.
    23. Stefan Eichler & Tom Lähner, 2014. "Forecast dispersion, dissenting votes, and monetary policy preferences of FOMC members: the role of individual career characteristics and political aspects," Public Choice, Springer, vol. 160(3), pages 429-453, September.
    24. Kokoszczyński, Ryszard & Mackiewicz-Łyziak, Joanna, 2024. "Making monetary policy in Poland: Are Polish hawks and doves different?," European Journal of Political Economy, Elsevier, vol. 81(C).
    25. Davide Romelli & Hamza Bennani, 2021. "Disagreement inside the FOMC: New Insights from Tone Analysis," Trinity Economics Papers tep1021, Trinity College Dublin, Department of Economics.

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