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Majority Rule, Consensus Building, and the Power of the Chairman: Arthur Burns and the FOMC

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  • Chappell, Henry W, Jr
  • McGregor, Rob Roy
  • Vermilyea, Todd

Abstract

This paper investigates decision making within the Federal Open Market Committee of the Federal Reserve, focusing on the competing pressures of majority rule, consensus building, and the power of the Chairman. To undertake this analysis, we have constructed an original data set recording desired federal funds rates for each member of the Committee over the 1970-78 period. Our results confirm a disproportionate influence of the Chairman in the policy process; they also confirm that other voting members of the Committee have an impact on policy choices. Estimates indicate that the Chairman exercises 40% to 50% of the voting weight in Committee decisions.

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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 36 (2004)
Issue (Month): 3 (June)
Pages: 407-22

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Handle: RePEc:mcb:jmoncb:v:36:y:2004:i:3:p:407-22

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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Cited by:
  1. Roman Horváth & Kateøina Šmídková & Jan Zápal & Marek Rusnák, 2012. "Dissent Voting Behavior of Central Bankers: What Do We Really Know?," Working Papers IES 2012/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2012.
  2. El-Shagi, Makram & Jung, Alexander, 2013. "Does the Greenspan era provide evidence on leadership in the FOMC?," Working Paper Series 1579, European Central Bank.
  3. Alan S. Blinder, 2009. "Making Monetary Policy by Committee," International Finance, Wiley Blackwell, vol. 12(2), pages 171-194, 08.
  4. Gerlach-Kristen, Petra, 2008. "Taking two steps at a time: On the optimal pattern of policy interest rates," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 550-570, February.
  5. Petra Gerlach-Kristen, 2008. "The Role of the Chairman in Setting Monetary Policy: Individualistic vs. Autocratically Collegial MPCs," International Journal of Central Banking, International Journal of Central Banking, vol. 4(3), pages 119-143, September.
  6. Helge Berger & Tonny Lybek & Volker Nitsch, 2006. "Central Bank Boards Around the World," IMF Working Papers 06/281, International Monetary Fund.
  7. Petra Gerlach-Kristen & Ellen E. Meade, 2010. "Is There a Limit on FOMC Dissents? Evidence from the Greenspan Era," Working Papers 2010-16, American University, Department of Economics.
  8. 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.
  9. Christopher Spencer, 2005. "Consensus Formation in Monetary Policy Committees," School of Economics Discussion Papers 1505, School of Economics, University of Surrey.
  10. R. Bosman & P. Maier & V. Sadiraj & F. van Winden, . "Let Me Vote! An experimental study of vote rotation in committees," Experimental Economics Center Working Paper Series 2006-18, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Aug 2013.
  11. Berger, Helge & Nitsch, Volker & Lybek, Tonny, 2008. "Central bank boards around the world: Why does membership size differ?," European Journal of Political Economy, Elsevier, vol. 24(4), pages 817-832, December.
  12. 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.
  13. Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2007. "How committees reduce the volatility of policy rates," DULBEA Working Papers 07-11.RS, ULB -- Universite Libre de Bruxelles.
  14. Henry Chappell & Rob McGregor & Todd Vermilyea, 2007. "The persuasive power of a Committee Chairman: Arthur Burns and the FOMC," Public Choice, Springer, vol. 132(1), pages 103-112, July.

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