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Do Federal Reserve presidents communicate with a regional bias?

  • Hayo, Bernd
  • Neuenkirch, Matthias

In this paper, we analyze the determinants of US monetary policy stance as expressed in speeches by Federal Reserve (Fed) officials over the period January 1998–September 2009. Econometrically, we use a probit model with regional and national macroeconomic variables to explain the content of these speeches. Our results are, first, that a rise in the inflation rate or the Leading Index makes a hawkish speech more likely. Second, when Fed presidents make a speech in their home district, its content is influenced by both regional and national macroeconomic variables, whereas speeches given outside the home district are influenced solely by national information. Third, the influence of regional variables increases during (i) Ben Bernanke’s tenure as Fed Chairman, (ii) recessions, and (iii) the financial crisis. Finally, speeches by nonvoting presidents reflect regional economic development to a greater extent than those by voting presidents.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 35 (2013)
Issue (Month): C ()
Pages: 62-72

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Handle: RePEc:eee:jmacro:v:35:y:2013:i:c:p:62-72
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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  4. Hayo, Bernd & Neuenkirch, Matthias, 2010. "Do Federal Reserve communications help predict federal funds target rate decisions?," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1014-1024, December.
  5. Chanont Banternghansa & Michael W. McCracken, 2009. "Forecast disagreement among FOMC members," Working Papers 2009-059, Federal Reserve Bank of St. Louis.
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  8. Peter Tillmann, 2010. "Strategic Forecasting on the FOMC," MAGKS Papers on Economics 201017, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  9. 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 661-77, August.
  10. Havrilesky, Thomas & Gildea, John, 1995. "The Biases of Federal Reserve Bank Presidents," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 274-84, April.
  11. Bernd Hayo & Pierre-Guillaume Méon, 2011. "Behind closed doors: Revealing the ECB’s Decision Rule," MAGKS Papers on Economics 201135, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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  15. Bernd Hayo & Ali M. Kutan & Matthias Neuenkirch, 2008. "Financial Market Reaction to Federal Reserve Communications: Does the Crisis Make a Difference?," MAGKS Papers on Economics 200808, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  16. Ellen E. Meade, 2005. "The FOMC: preferences, voting, and consensus," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 93-101.
  17. Belongia, Michael, 2009. "Reforming the Fed: what would real change look like?," MPRA Paper 18977, University Library of Munich, Germany, revised Dec 2009.
  18. 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.
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