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Regional Dissent: Local Economic Conditions Influence FOMC Votes

Author

Listed:
  • Anton Bobrov

    (Federal Reserve Bank of San Francisco)

  • Rupal Kamdar

    (Indiana University)

  • Mauricio Ulate

    (Federal Reserve Bank of San Francisco)

Abstract

U.S. monetary-policy decisions are made by the 12 voting members of the Federal Open Market Committee (FOMC). Seven of these members, coming from the Federal Reserve Board of Governors, inherently represent national-level interests. The remaining five members, a rotating group of presidents from the 12 Federal Reserve districts, come instead from sub-national jurisdictions. Does this structure have relevant implications for the monetary policy-making process? In this paper, we first build a panel dataset on economic activity across Fed districts. We then provide evidence that regional economic conditions influence the voting behavior of district presidents. Specifically, a regional unemployment rate that is one percentage point higher than the U.S. level is associated with an approximately nine percentage points higher probability of dissenting in favor of looser policy at the FOMC. This result is statistically significant, robust to different specifications, and indicates that the regional component in the structure of the FOMC could matter for monetary policy.

Suggested Citation

  • Anton Bobrov & Rupal Kamdar & Mauricio Ulate, 2024. "Regional Dissent: Local Economic Conditions Influence FOMC Votes," CAEPR Working Papers 2024-002 Classification-E, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2024002
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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2024-002.pdf
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    References listed on IDEAS

    as
    1. Hayo, Bernd & Neuenkirch, Matthias, 2013. "Do Federal Reserve presidents communicate with a regional bias?," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 62-72.
    2. 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.
    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. Olivier Coibion & Daniel Goldstein, 2012. "One for Some or One for All? Taylor Rules and Interregional Heterogeneity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 401-431, March.
    5. Eichler, Stefan & Lähner, Tom & Noth, Felix, 2018. "Regional banking instability and FOMC voting," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 282-292.
    6. Jonathon Hazell & Juan Herreño & Emi Nakamura & Jón Steinsson, 2022. "The Slope of the Phillips Curve: Evidence from U.S. States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1299-1344.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Monetary Policy; FOMC; Regional Economic Conditions; Taylor Rule;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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