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The Making of Hawks and Doves: Inflation Experiences on the FOMC

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  • Ulrike Malmendier
  • Stefan Nagel
  • Zhen Yan

Abstract

We show that personal experiences of inflation strongly influence the hawkish or dovish leanings of central bankers. For all members of the Federal Open Market Committee (FOMC) since 1951, we estimate an adaptive learning rule based on their lifetime inflation data. The resulting experience-based forecasts have significant predictive power for members' FOMC voting decisions, the hawkishness of the tone of their speeches, as well as the heterogeneity in their semi-annual inflation projections. Averaging over all FOMC members present at a meeting, inflation experiences also help to explain the federal funds target rate, over and above conventional Taylor rule components.

Suggested Citation

  • Ulrike Malmendier & Stefan Nagel & Zhen Yan, 2017. "The Making of Hawks and Doves: Inflation Experiences on the FOMC," NBER Working Papers 23228, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23228
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    Cited by:

    1. Hamza Bennani & Tobias Kranz & Matthias Neuenkirch, 2017. "The Determinants of Disagreement Between the FOMC and the Fed's Staff: New Insights Based on a Counterfactual Interest Rate," Research Papers in Economics 2017-10, University of Trier, Department of Economics.
    2. repec:eee:jmacro:v:54:y:2017:i:pa:p:110-126 is not listed on IDEAS

    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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