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Regional economic conditions and the FOMC votes of district presidents

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  • Geoffrey M. B. Tootell

Abstract

It is often argued that the institutional structure of the Federal Reserve System influences the formulation and attainment of national monetary policy goals. District Bank presidents do play a major role in the formulation of monetary policy. The Federal Reserve Bank of New York always has one of twelve votes at the policy-making Federal Open Market Committee (FOMC) meetings, and four of the remaining eleven votes rotate among the other Reserve Bank presidents. ; This article tests whether regional economic performance excessively influences the votes of District Bank presidents. The article quantifies the influence of regiona! conditions on District Bank voting by analyzing the monetary policy actually advocated by individual members of the FOMC. The results indicate that District Bank presidents set policy dependent on national, not their regional, conditions. A consensus- forming tendency could be the force that drives out any differences in tastes or models among FOMC members. Perhaps the ability to capture and utilize differentdnformation is the reason the regional diversity endures at the Fed.

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Bibliographic Info

Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

Volume (Year): (1991)
Issue (Month): Mar ()
Pages: 3-16

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Handle: RePEc:fip:fedbne:y:1991:i:mar:p:3-16

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Keywords: Federal Open Market Committee ; Regional economics;

References

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  1. Potts, Glenn T & Luckett, Dudley G, 1978. "Policy Objectives of the Federal Reserve System," The Quarterly Journal of Economics, MIT Press, vol. 92(3), pages 525-34, August.
  2. Eric S. Rosengren, 1990. "How diversified is New England?," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 3-16.
  3. Sachs, Jeffrey & Alesina, Alberto, 1988. "Political Parties and the Business Cycle in the United States, 1948-1984," Scholarly Articles 4553026, Harvard University Department of Economics.
  4. Havrilesky, Thomas M, 1987. "A Partisanship Theory of Fiscal and Monetary Regimes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(3), pages 308-25, August.
  5. Geoffrey M.B. Tootell, 1990. "Central bank flexibility and the drawbacks to currency unification," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-18.
  6. Abrams, Richard K & Froyen, Richard & Waud, Roger N, 1980. "Monetary Policy Reaction Functions, Consistent Expectations, and the Burns Era," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(1), pages 30-42, February.
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Cited by:
  1. Gambacorta, Leonardo, 2003. "Asymmetric bank lending channels and ECB monetary policy," Economic Modelling, Elsevier, vol. 20(1), pages 25-46, January.
  2. Brooks, Robert & Harris, Mark & Spencer, Christopher, 2007. "An Inflated Ordered Probit Model of Monetary Policy: Evidence from MPC Voting Data," MPRA Paper 8509, University Library of Munich, Germany.
  3. Cancelo, José Ramón & Varela, Diego & Sánchez-Santos, José Manuel, 2011. "Interest rate setting at the ECB: Individual preferences and collective decision making," Journal of Policy Modeling, Elsevier, vol. 33(6), pages 804-820.
  4. Ellen E. Meade & D. Nathan Sheets, 2002. "Regional Influences on U.S. Monetary Policy: Some Implications for Europe," CEP Discussion Papers dp0523, Centre for Economic Performance, LSE.
  5. Joe Peek & Eric S. Rosengren & Geoffrey M. B. Tootell, 1999. "Does the Federal Reserve possess an exploitable informational advantage?," Working Papers 99-8, Federal Reserve Bank of Boston.
  6. Helge Berger, 2006. "Optimal central bank design: Benchmarks for the ECB," The Review of International Organizations, Springer, vol. 1(3), pages 207-235, September.
  7. Martine Durand, 1999. "Challenges for International Economic Policy Coordination in EMU: Institutional Setting, Financial Market Reactions and the Importance of Systemic Risk," Empirica, Springer, vol. 26(3), pages 281-286, September.
  8. 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.
  9. Tootell, Geoffrey M. B., 1999. "Whose monetary policy is it anyway?," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 217-235, February.

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