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The making of hawks and doves

Ulrike Malmendier, Stefan Nagel () and Zhen Yan

Journal of Monetary Economics, 2021, vol. 117, issue C, 19-42

Abstract: 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.

Keywords: Monetary policy; Experience effects; Availability bias; Inflation forecasts; Federal funds rate (search for similar items in EconPapers)
JEL-codes: D84 E03 E50 (search for similar items in EconPapers)
Date: 2021
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Working Paper: The Making of Hawks and Doves (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:117:y:2021:i:c:p:19-42

DOI: 10.1016/j.jmoneco.2020.04.002

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