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Is There a Limit on FOMC Dissents? Evidence from the Greenspan Era

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  • Petra Gerlach-Kristen
  • Ellen E. Meade

Abstract

Dissents in the Federal Open Market Committee (FOMC) are relatively rare. Is this because policymakers late in the voting order are deterred from dissenting? Dissents became infrequent during Chairman Greenspan's tenure, arguably rejecting his growing influence. We show that policymaker dissents also were driven by the alphabetical voting order in the FOMC, the number of dissents already cast, whether the policymaker in question is a Board member, and inlation. Because dissents help forecast future changes in the Federal funds rate, this implicit constraint on dissents may be ineffcient in that it prevents the communication of useful information to financial markets.

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File URL: http://www.american.edu/cas/economics/pdf/upload/2010-16.pdf
File Function: First version, 2010-03
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Bibliographic Info

Paper provided by American University, Department of Economics in its series Working Papers with number 2010-16.

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Date of creation: Mar 2010
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Handle: RePEc:amu:wpaper:2010-16

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Web page: http://www.american.edu/cas/economics/

Related research

Keywords: Central banking; Monetary policy; Voting order; FOM;

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References

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  12. Alesina, Alberto & Sachs, Jeffrey, 1988. "Political Parties and the Business Cycle in the United States, 1948-1984," Scholarly Articles 4553026, Harvard University Department of Economics.
  13. 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.
  14. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
  15. Henry W. Chappell & Thomas M. Havrilesky & Rob Roy McGregor, 2000. "Monetary Policy Preferences Of Individual Fomc Members: A Content Analysis Of The Memoranda Of Discussion," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 454-460, August.
  16. 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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Citations

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Cited by:
  1. Alessandro Riboni & Francisco J. Ruge-Murcia, 2011. "Dissent in Monetary Policy Decisions," Working Paper Series 27_11, The Rimini Centre for Economic Analysis.
  2. Andrei Sirchenko, 2011. "Policymakers' Votes and Predictability of Monetary Policy," Economics Working Papers ECO2011/05, European University Institute.
  3. El-Shagi, Makram & Jung, Alexander, 2013. "Does the Greenspan era provide evidence on leadership in the FOMC?," Working Paper Series 1579, European Central Bank.

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