Network Structures and Heterogeneity in Policy Preferences at the FOMC

Arnab Bhattacharjee, Sean Holly and Mustapha Wasseja

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Transcripts from the US Federal Open Markets Committee provide, albeit with a lag, valuable information on the monetary policymaking process at the Federal Reserve Bank. We use the data compiled by Chappell et al. (2005b) on preferred interest rates (not votes) of individual FOMC members. Together with information on which monetary policy decisions are based, we use these preferred rates to understand decision making in the FOMC, focussing both on cross-member heterogeneity and interaction among the members of the committee. Our contribution is to provide a method of unearthing otherwise unobservable interactions between the members of the FOMC. We find substantial heterogeneity in the policy reaction function across members. Further, we identify significant interactions between individuals on the committee. The nature of these interdependencies tell us something about information sharing and strategic interactions within the FOMC and provide interesting comparisons with the Bank of England's Monetary Policy Committee.

Keywords: Monetary Policy; Interest Rates; FOMC Decision Making; Spatial Weights Matrix; Spatial Lag Model (search for similar items in EconPapers)
JEL-codes: C31 C34 E42 E43 E50 E58 (search for similar items in EconPapers)
Date: 2024-12-09
New Economics Papers: this item is included in nep-cdm and nep-mon
Note: sh247
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econ.cam.ac.uk/sites/default/files/pub ... pe-pdfs/cwpe2469.pdf

Related works:
Working Paper: Network structures and heterogeneity in policy preferences at the FOMC (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2469

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().