The FOMC: preferences, voting, and consensus

In this paper, the author develops and uses an original dataset from collected from the internal discussion of the Federal Reserve's monetary policy committee (the Federal Open Market Committee [FOMC] transcripts) to examine questions about the Committee's behavior. The data show that Chai...

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Bibliographic Details
Published in:Review - Federal Reserve Bank of St. Louis 2005-03, Vol.87 (2), p.93-101
Main Author: Meade, Ellen E
Format: Article
Language:English
Subjects:
Bias
Central banks
Committees
Communication policy
Datasets
Executives
Federal funding
Federal funds rate
Federal Open Market Committee
Federal Reserve monetary policy
Greenspan, Alan
Group dynamics
Interest rates
Leadership
Meetings
Monetary economics
Monetary policy
Organizational structure
Preferences
Presidents
Proposals
U.S.A
Voter behavior
Voters
Voting behaviour
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Summary:In this paper, the author develops and uses an original dataset from collected from the internal discussion of the Federal Reserve's monetary policy committee (the Federal Open Market Committee [FOMC] transcripts) to examine questions about the Committee's behavior. The data show that Chairman Alan Greenspan's proposals, after Committee discussion, were nearly always adopted unmodified in the formal vote. Despite the external appearance of consensus with little disagreement over decisions and an official dissent rate of 7.5 percent, the data reveal that the rate of disagreement in internal Committee discussions was quite high-on the order of 30 percent for discussions of the short-term interest rate. And, under the assumption that FOMC voters assigned a higher priority to their preferences for the short-term interest rate than for the bias in the policy directive, it can be shown that this bias was important for achieving consensus, which supports and extends the results of Thornton and Wheelock (2000). Thus, the novel dataset described in this paper helps to shed some light on the internal workings of the FOMC in the Greenspan years. Reprinted by permission of the Federal Reserve Bank of St. Louis
ISSN:0014-9187
2163-4505
DOI:10.20955/r.87.93-101