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

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Author Info
Chappell, Henry W, Jr
McGregor, Rob Roy
Vermilyea, Todd

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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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Publisher 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

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

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  1. Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2008. "How monetary policy committees impact the volatility of policy rates," Working Papers CEB 08-026.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  2. Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2007. "How committees reduce the volatility of policy rates," Working Papers DULBEA 07-11.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
  3. Helge Berger & Volker Nitsch & Tonny Lybek, 2006. "Central Bank Boards Around the World: Why Does Membership Size Differ?," IMF Working Papers 06/281, International Monetary Fund. [Downloadable!]
    Other versions:
  4. 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. [Downloadable!]
  5. Christopher Spencer, 2005. "Consensus Formation in Monetary Policy Committees," Department of Economics Discussion Papers 1505, Department of Economics, University of Surrey. [Downloadable!]
  6. Daniel Seidmann, 2006. "A Theory of Voting Patterns and Performance in Private and Public Committees," Discussion Papers 2006-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
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