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Do FOMC Members Herd?

Listed author(s):
  • Jan-Christoph Rülke

    ()

    (WHU - Otto Beisheim School of Management,WHU - Otto Beisheim School of Management)

  • Peter Tillmann

    ()

    (Justus-Liebig-University Giessen)

Twice a year FOMC members submit forecasts for growth, unemplyoment and in ation to be published in the Humphrey-Hawkins Report to Congress. In this paper we use individual FOMC forecasts to assess whether these forecasts exhibit herding behavior, a pattern often found in private sector forecasts. While growth and unemployment forecast do not show herding behavior, the in ation forecasts show strong evidence of anti-herding, i.e. FOMC members intentionally scatter their forecasts around the consensus. Interestingly, anti-herding is more important for nonvoting members than for voters.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/32-2010_ruelke.pdf
File Function: First version, 2010
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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201032.

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Length: 9 pages
Date of creation: 2010
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201032
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Web page: http://www.uni-marburg.de/fb02/
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  1. 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, 08.
  2. Gavin, William T. & Mandal, Rachel J., 2003. "Evaluating FOMC forecasts," International Journal of Forecasting, Elsevier, vol. 19(4), pages 655-667.
  3. 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.
  4. William T. Gavin, 2003. "FOMC forecast: is all the information in the central tendency?," Review, Federal Reserve Bank of St. Louis, issue May, pages 27-46.
  5. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, vol. 27(3), pages 547-553, September.
  6. Christina D. Romer & David H. Romer, 2008. "The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?," American Economic Review, American Economic Association, vol. 98(2), pages 230-235, May.
  7. Bernhardt, Dan & Campello, Murillo & Kutsoati, Edward, 2006. "Who herds?," Journal of Financial Economics, Elsevier, vol. 80(3), pages 657-675, June.
  8. William T. Gavin & Geetanjali Pande, 2008. "FOMC consensus forecasts," Review, Federal Reserve Bank of St. Louis, issue May, pages 149-164.
  9. Michael W. McCracken, 2010. "Using FOMC forecasts to forecast the economy," Economic Synopses, Federal Reserve Bank of St. Louis.
  10. 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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