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Is the U.S. Fed Voting Record Informative about Future Monetary Policy?

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Abstract

We examine the information content of U.S. Fed voting records under the Greenspan chairmanship. We find that the voting records of FOMC members, as captured by the difference between the average voted-for and actually implemented policy rate, signal the future course of monetary policy. The committee bias, an official statement on how the Fed is leaning in terms of its next interest rate move, is found to improve monetary policy predictability, too. On the other hand, the voting of alternate members, who actively contribute to the discussions at the monetary policy meetings but whose votes do not count for setting the interest rate, does not have predictive power and is more in line with that of the chairman.

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Bibliographic Info

Article provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.

Volume (Year): 62 (2012)
Issue (Month): 6 (December)
Pages: 478-484

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Handle: RePEc:fau:fauart:v:62:y:2012:i:6:p:478-484

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Keywords: monetary policy; voting record; transparency;

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  1. Roman Horváth & Kateøina Šmídková & Jan Zápal, 2011. "Central Banks’ Voting Records and Future Policy," Working Papers IES 2011/37, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2011.
  2. Geert Bekaert & Marie Hoerova & Marco Lo Duca, 2012. "Risk, uncertainty and monetary policy," Working Paper Research 229, National Bank of Belgium.
  3. Petra Gerlach-Kristen, 2004. "Is the MPC's Voting Record Informative about Future UK Monetary Policy?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 299-313, 06.
  4. Alessandro Riboni & Francisco J. Ruge-Murcia, 2011. "Dissent in Monetary Policy Decisions," Working Paper Series 27_11, The Rimini Centre for Economic Analysis.
  5. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," NBER Working Papers 13932, National Bureau of Economic Research, Inc.
  6. EllenE. Meade & David Stasavage, 2008. "Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve," Economic Journal, Royal Economic Society, vol. 118(528), pages 695-717, 04.
  7. Henry W. Chappell, Jr. & Rob Roy McGregor & Todd A. Vermilyea, 2005. "Committee Decisions on Monetary Policy: Evidence from Historical Records of the Federal Open Market Committee," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033305, December.
  8. Michael Ehrmann & Marcel Fratzscher, 2013. "Dispersed communication by central bank committees and the predictability of monetary policy decisions," Public Choice, Springer, vol. 157(1), pages 223-244, October.
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