IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-04206047.html
   My bibliography  Save this paper

Influence of regional cycles and personal background on FOMC members’ preferences and disagreement

Author

Listed:
  • Hamza Bennani

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

  • Etienne Farvaque

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique, SKEMA Business School)

  • Piotr Stanek

    (Cracow University of Economics)

Abstract

This paper sheds some new light on the determinants of FOMC members' monetary policy preferences. For that purpose, we use a new dataset of macroeconomic indicators for the Fed districts, as well as preferences revealed by FOMC members in the Transcripts, to compute a desired interest rate for each individual member. First, we find that FOMC members react to the regional unemployment rate. Second, individuals holding a Master or Bachelor degree, and issued from either the central bank, or from the private or public sector have a higher propensity to disagree on the dovish side, while women tend to disagree on the hawkish side. These findings provide further insights for central bank watchers about the upcoming policy decisions that are likely to be implemented by the FOMC, following the composition of its committee and the evolution of regional cycles.

Suggested Citation

  • Hamza Bennani & Etienne Farvaque & Piotr Stanek, 2018. "Influence of regional cycles and personal background on FOMC members’ preferences and disagreement," Post-Print hal-04206047, HAL.
    • Handle: RePEc:hal:journl:hal-04206047
    DOI: 10.1016/j.econmod.2017.08.014
    Note: View the original document on HAL open archive server: https://hal.science/hal-04206047
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04206047/document
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.econmod.2017.08.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Geoffrey M. B. Tootell, 1991. "Regional economic conditions and the FOMC votes of district presidents," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 3-16.
    2. Hayo, Bernd & Neuenkirch, Matthias, 2013. "Do Federal Reserve presidents communicate with a regional bias?," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 62-72.
    3. Belke, Ansgar & Klose, Jens, 2013. "Modifying Taylor reaction functions in the presence of the zero‐lower‐bound — Evidence for the ECB and the Fed," Economic Modelling, Elsevier, vol. 35(C), pages 515-527.
    4. A. Jung, 2013. "Policymakers’ Interest Rate Preferences: Recent Evidence for Three Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 9(3), pages 150-197, September.
    5. Ellis, Michael A. & Liu, Dandan, 2013. "Do FOMC forecasts add value to staff forecasts?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 332-340.
    6. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 432-441, November.
    7. John P. Judd & Glenn D. Rudebusch, 1998. "Taylor's rule and the Fed, 1970-1997," Economic Review, Federal Reserve Bank of San Francisco, pages 3-16.
    8. 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.
    9. El-Shagi, Makram & Jung, Alexander, 2015. "Does the Greenspan era provide evidence on leadership in the FOMC?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 173-190.
    10. Farvaque Etienne & Stanek Piotr & Hammadou Hakim, 2011. "Selecting Your Inflation Targeters: Background and Performance of Monetary Policy Committee Members," German Economic Review, De Gruyter, vol. 12(2), pages 223-238, May.
    11. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-677, August.
    12. Fendel, Ralf & Rülke, Jan-Christoph, 2012. "Are heterogeneous FOMC forecasts consistent with the Fed’s monetary policy?," Economics Letters, Elsevier, vol. 116(1), pages 5-7.
    13. Charléty, Patricia & Romelli, Davide & Santacreu-Vasut, Estefania, 2017. "Appointments to central bank boards: Does gender matter?," Economics Letters, Elsevier, vol. 155(C), pages 59-61.
    14. Etienne Farvaque & Piotr Stanek & Stéphane Vigeant, 2014. "On the Performance of Monetary Policy Committees," Kyklos, Wiley Blackwell, vol. 67(2), pages 177-203, May.
    15. Thomas Havrilesky & John Gildea, 1991. "Screening Fomc Members For Their Biases And Dependability," Economics and Politics, Wiley Blackwell, vol. 3(2), pages 139-149, July.
    16. Mark Harris & Paul Levine & Christopher Spencer, 2011. "A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members," Public Choice, Springer, vol. 146(3), pages 413-442, March.
    17. Alan S. Blinder & Ricardo Reis, 2005. "Understanding the Greenspan standard," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 11-96.
    18. Henry W. Chappell & Thomas M. Havrilesky & Rob Roy McGregor, 1993. "Partisan Monetary Policies: Presidential Influence Through the Power of Appointment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(1), pages 185-218.
    19. Farvaque, Etienne & Matsueda, Norimichi & Méon, Pierre-Guillaume, 2009. "How monetary policy committees impact the volatility of policy rates," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 534-546, December.
    20. Sirchenko Andrei, 2012. "A model for ordinal responses with an application to policy interest rate," EERC Working Paper Series 12/13e, EERC Research Network, Russia and CIS.
    21. Edison, Hali J. & Marquez, Jaime, 1998. "US monetary policy and econometric modeling: tales from the FOMC transcripts 1984-1991," Economic Modelling, Elsevier, vol. 15(3), pages 411-428, July.
    22. Hayo, Bernd & Neumeier, Florian, 2014. "Political leaders' socioeconomic background and fiscal performance in Germany," European Journal of Political Economy, Elsevier, vol. 34(C), pages 184-205.
    23. Johnson, Eric D. & Ellis, Michael A. & Kotenko, Diana, 2012. "Consensus building on the FOMC: An analysis of end of tenure policy preferences," Economics Letters, Elsevier, vol. 117(1), pages 368-371.
    24. Deborah J. Danker & Matthew M. Luecke, 2005. "Background on FOMC meeting minutes," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 91(Spr), pages 175-179.
    25. Henry W. Chappell & Rob Roy McGregor, 2000. "A Long History of FOMC Voting Behavior," Southern Economic Journal, John Wiley & Sons, vol. 66(4), pages 906-922, April.
    26. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, vol. 27(3), pages 547-553, September.
    27. Roman Horvath & Marek Rusnak & Katerina Smidkova & Jan Zapal, 2014. "The dissent voting behaviour of central bankers: what do we really know?," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 450-461, February.
    28. Diouf, Ibrahima & Pépin, Dominique, 2017. "Gender and central banking," Economic Modelling, Elsevier, vol. 61(C), pages 193-206.
    29. Henry W. Chappell Jr. & Rob Roy McGregor, 2000. "A Long History of FOMC Voting Behavior," Southern Economic Journal, John Wiley & Sons, vol. 66(4), pages 906-922, April.
    30. Alan S. Blinder & Ricardo Reis, 2005. "Understanding the Greenspan standard," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 11-96.
    31. Yash P. Mehra & Bansi Sawhney, 2010. "Inflation measure, Taylor rules, and the Greenspan-Bernanke years," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 96(2Q), pages 123-151.
    32. Pierre-Guillaume Méon & Etienne Farvaque & Norimichi Matsueda, 2009. "How committees impact the volatility of policy rates," ULB Institutional Repository 2013/13608, ULB -- Universite Libre de Bruxelles.
    33. 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.
    34. Gildea, John A, 1992. "The Regional Representation of Federal Reserve Bank Presidents," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 215-225, May.
    35. Michael Woodford, 2003. "Optimal Interest-Rate Smoothing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(4), pages 861-886.
    36. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    37. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Donato Masciandaro & Paola Profeta & Davide Romelli, 2023. "Women and Governance: Central Bank Boards and Monetary Policy," Trinity Economics Papers tep1123, Trinity College Dublin, Department of Economics.
    2. Hamza Bennani & Davide Romelli, 2024. "Exploring the informativeness and drivers of tone during committee meetings: the case of the Federal Reserve," Post-Print hal-04670309, HAL.
    3. 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.
    4. D. Masciandaro, 2019. "What Bird Is That? Central Banking And Monetary Policy In The Last Forty Years," BAFFI CAREFIN Working Papers 19127, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. Rieder, Kilian, 2022. "Monetary policy decision-making by committee: Why, when and how it can work," European Journal of Political Economy, Elsevier, vol. 72(C).
    6. Jan C. van Ours, 2022. "How Retirement Affects Mental Health, Cognitive Skills and Mortality; an Overview of Recent Empirical Evidence," Tinbergen Institute Discussion Papers 22-050/V, Tinbergen Institute.
    7. Masciandaro, Donato, 2022. "Independence, conservatism, and beyond: Monetary policy, central bank governance and central banker preferences (1981–2021)," Journal of International Money and Finance, Elsevier, vol. 122(C).
    8. Donato Masciandaro & Paola Profeta & Davide Romelli, 2020. "Do Women Matter in Monetary Policy Boards?," BAFFI CAREFIN Working Papers 20148, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    9. Donato Masciandaro, 2021. "Central Bank Governance in Monetary Policy Economics (1981-2020)," BAFFI CAREFIN Working Papers 21153, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    10. Michael Brei & Blaise Gadanecz, 2021. "Inter-agency coordination bodies and the speed of prudential policy responses to the Covid-19 pandemic," BIS Working Papers 969, Bank for International Settlements.
    11. 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).
    12. Davide Romelli & Hamza Bennani, 2021. "Disagreement inside the FOMC: New Insights from Tone Analysis," Trinity Economics Papers tep1021, Trinity College Dublin, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Jung, Alexander & Latsos, Sophia, 2015. "Do federal reserve bank presidents have a regional bias?," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 173-183.
    4. Eichler, Stefan & Lähner, Tom & Noth, Felix, 2016. "Regional Banking Instability and FOMC Voting," IWH Discussion Papers 15/2016, Halle Institute for Economic Research (IWH).
    5. El-Shagi, Makram & Jung, Alexander, 2015. "Does the Greenspan era provide evidence on leadership in the FOMC?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 173-190.
    6. 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.
    7. Lähner, Tom, 2015. "Inconsistent voting behavior in the FOMC," Hannover Economic Papers (HEP) dp-546, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    8. Donato Masciandaro & Paola Profeta & Davide Romelli, 2023. "Women and Governance: Central Bank Boards and Monetary Policy," Trinity Economics Papers tep1123, Trinity College Dublin, Department of Economics.
    9. Masciandaro, Donato, 2022. "Independence, conservatism, and beyond: Monetary policy, central bank governance and central banker preferences (1981–2021)," Journal of International Money and Finance, Elsevier, vol. 122(C).
    10. Matthias Neuenkirch & Peter Tillmann, 2016. "Does A Good Central Banker Make A Difference?," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1541-1560, July.
    11. Eichler, Stefan & Lähner, Tom & Noth, Felix, 2018. "Regional banking instability and FOMC voting," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 282-292.
    12. Sylvester Eijffinger & Ronald Mahieu & Louis Raes, 2016. "Monetary Policy Committees, Voting Behavior and Ideal Points," BAFFI CAREFIN Working Papers 1628, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    13. Hamza Bennani & Tobias Kranz & Matthias Neuenkirch, 2017. "Disagreement Between the FOMC and the Fed's Staff: New Insights Based on a Counterfactual Interest Rate," Research Papers in Economics 2017-10, University of Trier, Department of Economics.
    14. Farvaque, Etienne & Malan, Franck & Stanek, Piotr, 2020. "Misplaced childhood: When recession children grow up as central bankers," Journal of Economic Dynamics and Control, Elsevier, vol. 110(C).
    15. Donato Masciandaro & Paola Profeta & Davide Romelli, 2020. "Do Women Matter in Monetary Policy Boards?," BAFFI CAREFIN Working Papers 20148, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    16. Donato Masciandaro & Davide Romelli, 2019. "Behavioral Monetary Policymaking: Economics, Political Economy and Psychology," World Scientific Book Chapters, in: Behavioral Finance The Coming of Age, chapter 9, pages 285-329, World Scientific Publishing Co. Pte. Ltd..
    17. Guido Schultefrankenfeld, 2020. "Appropriate monetary policy and forecast disagreement at the FOMC," Empirical Economics, Springer, vol. 58(1), pages 223-255, January.
    18. 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).
    19. Riboni, Alessandro & Ruge-Murcia, Francisco, 2014. "Dissent in monetary policy decisions," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 137-154.
    20. 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.

    More about this item

    Keywords

    Transcripts FOMC Interest Rate; Individual Taylor Rule; JEL Classification: E43; E58; F36; Transcripts; FOMC; Interest Rate; Individual Taylor Rule; JEL Classification: E43; E58; F36; FOMC Interest Rate Individual Taylor Rule JEL Classification: E43 E58 F36; Interest Rate; Individual Taylor Rule JEL Classification: E43; E58; F36;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-04206047. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.