Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/303042 
Year of Publication: 
2024
Series/Report no.: 
Accountancy, Economics, and Finance Working Papers No. 2024-10
Publisher: 
Heriot-Watt University, Department of Accountancy, Economics, and Finance, Edinburgh
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.
Subjects: 
Monetary policy
Interest rates
FOMC decision making
Spatial Weights Matrix
Spatial Lag Model
JEL: 
E42
E43
E50
E58
C31
C34
Document Type: 
Working Paper

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