Conventional and Unconventional Votes: A Tale of Three Monetary Policy Committees

Following the 2008 global financial crisis, short-term interest rates in a number of major economies reached the effective zero-lower bound (ZLB), joining Japan, which has experienced prolonged deflation and virtually zero interest-rates since 1998. In such a low policy interest-rate environment, members of monetary policy committees no longer vote solely on the level of the policy-rate, but measures which are commonly described as being `unconventional'. Focussing on the experience of the United States FOMC, the Bank of Japan's Policy Board, and the Bank of England's MPC, the drivers of dissent voting behavior under conventional and unconventional monetary policy regimes are modeled. Among our findings, we show that relative to conventional policy regimes, committee members voting in unconventional regimes who are (i) directly appointed by the government, and (ii) appointed in periods during which left-wing governments are in power, are more likely to dissent on the side of monetary ease. Put another way, the decision to dissent is partially governed by whether the monetary policy regime is a conventional or an unconventional one.