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Stock returns of federal reserve officials

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  • Couture, Cody
  • Smit, Abhiprerna

Abstract

This paper examines the trading behavior of members of the Federal Reserve’s Federal Open Market Committee (FOMC). First, we calculate the financial market returns of FOMC members relative to the overall market and examine if there is any evidence of abnormal returns. Second, we test whether FOMC members exhibit evidence of market timing around monetary policy announcements. We do not find any evidence that FOMC officials select securities that earn abnormal returns. However, our results regarding market timing are mixed. Though we do not find any evidence of security selection or portfolio rebalancing with respect to monetary policy decisions, we do find that stock sales by FOMC officials are typically succeeded by negative returns in the overall stock market.

Suggested Citation

  • Couture, Cody & Smit, Abhiprerna, 2025. "Stock returns of federal reserve officials," European Journal of Political Economy, Elsevier, vol. 90(PB).
    • Handle: RePEc:eee:poleco:v:90:y:2025:i:pb:s0176268025000990
    DOI: 10.1016/j.ejpoleco.2025.102739
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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