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Publicity of debate and the incentive to dissent: evidence from the US federal reserve

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  • Meade, Ellen E.
  • Stasavage, David

Abstract

When central banks are transparent about their decision making, there may be clear benefits in terms of credibility, policy effectiveness, and improved democratic accountability. While recent literature has focused on all of these advantages of transparency, in this paper we consider one potential cost: the possibility that publishing detailed records of deliberations will make members of a monetary policy committee more reluctant to offer dissenting opinions. Drawing on the recent literature on expert advisors with ¿career concerns¿, we construct a model that compares incentives for members of a monetary policy committee to voice dissent when deliberations occur in public, and when they occur in private. We then test the implications of the model using an original dataset based on deliberations of the Federal Reserve¿s Federal Open Market Committee, asking whether the FOMC¿s decision in 1993 to begin releasing full transcripts of its meetings has altered incentives for participants to voice dissenting opinions. We find this to be the case with regard to both opinions on shortterm interest rates and on the ¿bias¿ for future policy.

Suggested Citation

  • Meade, Ellen E. & Stasavage, David, 2004. "Publicity of debate and the incentive to dissent: evidence from the US federal reserve," LSE Research Online Documents on Economics 19994, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:19994
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    References listed on IDEAS

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    More about this item

    Keywords

    transparency; central banking; career concerns;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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