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Are heterogeneous FOMC forecasts consistent with the Fed’s monetary policy?

Author

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  • Fendel, Ralf
  • Rülke, Jan-Christoph

Abstract

Yes, they are! We find that although there is a surprisingly high dispersion of individual forecasts and some dissent on the Federal Funds target, the FOMC’s individual behavior is well described by a Taylor-type rule.

Suggested Citation

  • Fendel, Ralf & Rülke, Jan-Christoph, 2012. "Are heterogeneous FOMC forecasts consistent with the Fed’s monetary policy?," Economics Letters, Elsevier, vol. 116(1), pages 5-7.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:1:p:5-7
    DOI: 10.1016/j.econlet.2011.12.132
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    References listed on IDEAS

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    1. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 115(1), pages 147-180.
    2. Rülke, Jan-Christoph & Tillmann, Peter, 2011. "Do FOMC members herd?," Economics Letters, Elsevier, vol. 113(2), pages 176-179.
      • Jan-Christoph Rülke & Peter Tillmann, 2010. "Do FOMC Members Herd?," MAGKS Papers on Economics 201032, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. David Romer, 2010. "A New Data Set on Monetary Policy: The Economic Forecasts of Individual Members of the FOMC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 951-957, August.
    4. Clarida, Richard & Gali, Jordi & Gertler, Mark, 1998. "Monetary policy rules in practice Some international evidence," European Economic Review, Elsevier, vol. 42(6), pages 1033-1067, June.
    5. Athanasios Orphanides & Volker W. Wieland, 2008. "Economic projections and rules of thumb for monetary policy," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 307-324.
    6. Michael W. McCracken, 2010. "Using FOMC forecasts to forecast the economy," Economic Synopses, Federal Reserve Bank of St. Louis.
    7. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, vol. 27(3), pages 547-553, September.
    8. 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, January.
    9. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    10. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-677, August.
    11. Ellen E. Meade, 2005. "The FOMC: preferences, voting, and consensus," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 93-101.
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    Citations

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    Cited by:

    1. Jung, Alexander & Latsos, Sophia, 2015. "Do federal reserve bank presidents have a regional bias?," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 173-183.
    2. Maritta Paloviita and Matti Viren, 2012. "Are individual survey expectations internally consistent?," Discussion Papers 77, Aboa Centre for Economics.
    3. Sheng, Xuguang (Simon), 2015. "Evaluating the economic forecasts of FOMC members," International Journal of Forecasting, Elsevier, vol. 31(1), pages 165-175.
    4. Schultefrankenfeld, Guido, 2017. "Appropriate monetary policy and forecast disagreement at the FOMC," Discussion Papers 39/2017, Deutsche Bundesbank.
    5. El-Shagi, Makram & Jung, Alexander, 2015. "Does the Greenspan era provide evidence on leadership in the FOMC?," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 173-190.
    6. Ellis, Michael A. & Liu, Dandan, 2013. "Do FOMC forecasts add value to staff forecasts?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 332-340.
    7. Hamza Bennani, 2016. "Measuring Monetary Policy Stress for Fed District Representatives," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 156-176, May.
    8. Ellis, Michael A. & Liu, Dandan, 2016. "FOMC forecasts and monetary policy deliberations," Economics Letters, Elsevier, vol. 147(C), pages 131-134.

    More about this item

    Keywords

    FOMC; Forecasts; Taylor rule;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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