Economics at your fingertips  

Disagreement between FOMC members and the Fed’s staff: New insights based on a counterfactual interest rate

Hamza Bennani (), Tobias Kranz and Matthias Neuenkirch ()

Journal of Macroeconomics, 2018, vol. 58, issue C, 139-153

Abstract: We examine the degree and sources of disagreement between the members of the Federal Open Market Committee (FOMC) and the Federal Reserve’s (Fed’s) staff about the appropriate policy rate for the period 1994–2012. For that purpose, we compute a recommended interest rate for the Fed’s staff based on its own Greenbook forecasts and a time-varying monetary policy rule à la Taylor (1993), and compare it with the actual target rate. First, we find that there has been internal disagreement between FOMC members and the Fed’s staff about the appropriate policy rate. Second, we reveal that members with an occupational background in finance favor a relatively more hawkish monetary policy. In addition, a preference towards a tighter monetary policy is found under a Democratic President and during Alan Greenspan’s tenure as the Fed’s Chairman. Finally, higher oil prices, a low degree of uncertainty, and episodes of financial stability are also associated with higher interest rates as compared to the Fed staff’s recommendation.

Keywords: Disagreement; Federal open market committee; Federal reserve staff; Monetary policy; Taylor rule (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Disagreement Between FOMC Members and the Fed’s Staff: New Insights Based on a Counterfactual Interest Rate (2018)
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:

DOI: 10.1016/j.jmacro.2018.09.002

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-10-14
Handle: RePEc:eee:jmacro:v:58:y:2018:i:c:p:139-153