Regional Dissent: Local Economic Conditions Influence FOMC Votes

Anton Bobrov (), Rupal Kamdar and Mauricio Ulate
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Anton Bobrov: Federal Reserve Bank of San Francisco

CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: U.S. monetary-policy decisions are made by the 12 voting members of the Federal Open Market Committee (FOMC). Seven of these members, coming from the Federal Reserve Board of Governors, inherently represent national-level interests. The remaining five members, a rotating group of presidents from the 12 Federal Reserve districts, come instead from sub-national jurisdictions. Does this structure have relevant implications for the monetary policy-making process? In this paper, we first build a panel dataset on economic activity across Fed districts. We then provide evidence that regional economic conditions influence the voting behavior of district presidents. Specifically, a regional unemployment rate that is one percentage point higher than the U.S. level is associated with an approximately nine percentage points higher probability of dissenting in favor of looser policy at the FOMC. This result is statistically significant, robust to different specifications, and indicates that the regional component in the structure of the FOMC could matter for monetary policy.

Keywords: Monetary Policy; FOMC; Regional Economic Conditions; Taylor Rule (search for similar items in EconPapers)
Pages: 29 pages
Date: 2024-02
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cdm, nep-mon and nep-ure
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https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2024-002.pdf (application/pdf)

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Working Paper: Regional Dissent: Do Local Economic Conditions Influence FOMC Votes? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2024002

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