Hawkish or dovish central bankers: do different flocks matter for fiscal shocks?

Lukas Hack, Klodiana Istrefi and Matthias Meier

Research Bulletin, 2023, vol. 114

Abstract: This column presents evidence on the role that US monetary policy plays in how fiscal spending affects the economy. A dovish Federal Open Market Committee (FOMC) delays policy rate increases, while a hawkish FOMC tightens monetary policy more promptly, following increased fiscal spending. We show that the dovish response supports fiscal expansions. In contrast, the hawkish response results in a GDP decline but effectively controls inflation expectations. JEL Classification: E32, E52, E62, E63, H56

Keywords: FOMC; government spending; monetary policy (search for similar items in EconPapers)
Date: 2023-12
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