Horvath, Roman and Rusnak, Marek and Smidkova, Katerina and Zapal, Jan (2011): Dissent voting behavior of central bankers: what do we really know?
Download (479Kb) | Preview
Abstract We examine the determinants of the dissent in central bank boards’ voting records about monetary policy rates in the Czech Republic, Hungary, Sweden, the U.K. and the U.S. In contrast to previous studies, we consider about 25 different macroeconomic, financial, institutional, psychological or preference-related factors jointly and deal formally with the attendant model uncertainty using Bayesian model averaging. We find that the rate of dissent is between 5% and 20% in these central banks. Our results suggest that most regressors, including those capturing the effect of inflation and output, are not robust determinants of voting dissent. The difference in central bankers’ preferences is likely to drive the dissent in the U.S. Fed and the Bank of England. For the Czech and Hungarian central banks, average dissent tends to be larger when policy rates are changed. Some evidence is also found that food price volatility tends to increase the voting dissent in the U.S. Fed and in Riksbank.
|Item Type:||MPRA Paper|
|Original Title:||Dissent voting behavior of central bankers: what do we really know?|
|Keywords:||monetary policy, voting record, dissent|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
|Depositing User:||Roman Horvath|
|Date Deposited:||10. Nov 2011 21:51|
|Last Modified:||15. Feb 2013 23:04|
Baumeister, R. F. and Vohs, K. D., 2007. Encyclopedia of Social Psychology. Thousand Oaks: Sage Publications.
Berger, H., Nitsch, V. and Lybek, T., 2008. Central bank boards around the world: Why does membership size differ?. European Journal of Political Economy, 24 (4), 817-832.
Berk, J. M., Beirut, B. and Meade, E. E., 2010. The Dynamic Voting Patterns of the Bank of England’s MPC, DNB Working Paper no. 261.
Berk, J. M., and Beirut, B., 2011.Communication in a monetary policy committee. European Journal of Political Economy, 27(4), 791-801.
Besley, T.; Meads, N. and Surico, P., 2008. Insiders Versus Outsiders in Monetary Policymaking. American Economic Review, 98(2), 218-23.
Bhattacharjee, A. and Holly, S., 2006. Taking Personalities out of Monetary Policy Making: Interactions, Heterogeneity and Committee Decisions in the Bank of England's MPC, CDMA Working Paper Series 0612, Centre for Dynamic Macroeconomic Analysis.
Bhattacharjee, A. and Holly, S., 2010. Rational Partisan Theory, Uncertainty and Spatial Voting: Evidence for the Bank of England's MPC, Economics and Politics, 22(2), 151-179.
Blinder, A. S., and Morgan, J., 2005. Are Two Heads Better Than One? Monetary Policy by Committee. Journal of Money, Credit, and Banking, 37 (5), 798-811.
Brown, R., 2000. Group Processes, Dynamics Within and Between Groups. Oxford: Blackwell Publishers.
Cardarelli, R., Elekdag, S. and Lall, S., 2011. Financial Stress and Economic Contractions. Journal of Financial Stability, 7(2), 78–97.
Chappell, H. W., Jr.; Havrilesky, T. M. and McGregor, R. R., 1977. Monetary Policy Preferences of Individual FOMC Members: A Content Analysis of the Memoranda of Discussion. The Review of Economics and Statistics, 79(3), 454-60.
Chappell, H. W., Jr. and McGregor, R. R., 2000. A Long History of FOMC Voting Behavior. Southern Economic Journal, 66(4), 906-22.
Chappell, H. W., Jr.; McGregor, R. R. and Vermilyea, T., 2004. Majority Rule, Consensus Building, and the Power of the Chairman: Arthur Burns and the FOMC. Journal of Money, Credit and Banking, 36(3), 407-22.
References Chappell, H.W., Jr.; McGregor, R. R. and Vermilyea, T. A., 2005. Committee Decisions on Monetary Policy, Evidence from Historical Records of the Federal Open Market Committee. London: MIT Press.
Chappell, H. W., Jr.; McGregor, R. R. and Vermilyea, T. A., 2008. Regional Economic Conditions and Monetary Policy. European Journal of Political Economy, 24(2), 283-93.
References Cialdini, R. B. and Goldstein, N. J., 2004. Social Influence: Compliance and Conformity. Annual Review of Psychology, 55(1), 591-621.
ECB, (2006). A Journey from Theory to Practice, An ECB Colloquium Held in Honour of Otmar Issing, 16-17 MARCH 2006, Frankfurt am Main: European Central Bank.
Eicher, T., Papageorgiou, C. and A. E. Raftery. 2011. Default Priors and Predictive Performance in Bayesian Model Averaging, with Application to Growth Determinants. Journal of Applied Econometrics 26(1): 30-55.
Erhart, S. and Vasquez-Paz, J., 2007. Optimal Monetary Policy Committee Size: Theory and Cross Country Evidence. MNB Working Paper Series, No. 6.
Feldkircher, M. and S. Zeugner. 2009. Benchmark Priors Revisited: On Adaptive Shrinkage and the Supermodel Effect in Bayesian Model Averaging. IMF Working Paper 09-202.
Fernandez, C., Ley, E. and M. Steel. 2001a. Model Uncertainty in Cross-Country Growth Regressions. Journal of Applied Econometrics 16(5): 563-576.
Fernandez, C., Ley, E. and M. Steel. 2001b. Benchmark Priors for Bayesian Model Averaging. Journal of Econometrics 16(5): 563-576.
References Foster, D.P. and E.I. George. 1984. The Risk Inflation Criterion for Multiple Regressions. The Annals of Statistics 22: 1947-1975.
Gerlach-Kristen, P., 2003. Insiders and Outsiders at the Bank of England. Central Banking, 14(1), 96-102.
Gerlach-Kristen, P., 2004. Is the MPC’s Voting Record Informative about Future UK Monetary Policy?, Scandinavian Journal of Economics, 106(2), 299–313.
Hansen, S. and McMahon, M. F., 2011. How Experts Decide: Identifying Preferences versus Signals from Policy Decisions. The Warwick Economics Research Paper Series (TWERPS) 963, University of Warwick, Department of Economics.
Harris, M., N., Levine, P. and Spencer, C., 2011. A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members. Public Choice, 146, 413-442.
Harris, M.N. and Spencer, C., 2009. The Policy Choices and Reaction Functions of Bank of England MPC Members. Southern Economic Journal, 76(2), 482-499.
Hoeting, J.A., Madigan, D., Raftery, A.E. and Volinsky, C.T., 1999. Bayesian model averaging: A tutorial (with Discussion). Statistical Science, 14, 382--401.
Horvath, R., Smidkova, K. and Zapal, J., 2010. Central Banks' Voting Records and Future Policy". Working Papers 2010/11, Czech National Bank, Research Department.
Issing, O., 1999. The eurosystem: transparent and accountable, or “Willem in Euroland”, Journal of Common Market Studies, 37 (3), 503-519.
Koop, G. 2003. Bayesian Econometrics. Wiley, Chicester, UK.
References Koop, G., D.J. Poirier and J. Tobias. 2007. Bayesian Econometric Methods. Cambridge University Press.
Ley, E. and M. Steel. 2009. On the Effect of Prior Assumptions in Bayesian Model Averaging with Applications to Growth Regression. Journal of Applied Econometrics 24(4): 651-674.
Madigan, D. and J. York. 1995. Bayesian Graphical Models for Discrete Data. International Statistical Review 63: 1023-1036.
Meade, E. E. and Sheets, N. D., 2005. Regional Influences on FOMC Voting Patterns. Journal of Money, Credit and Banking, 37(4), 661-77.
Meade, E. E. and Stasavage, D. 2008. Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve, Economic Journal, 118(528), 695-717.
Meade, E. E., 2010. Federal Reserve Transcript Publication And Regional Representation, Contemporary Economic Policy, 28(2), 162-170.
Montgomery, J.M. and B. Nyhan. 2010. Bayesian Model Averaging: Theoretical Developments and Practical Applications. Political Analysis, 18, 245-270.
Raftery, A.E., 1995. Bayesian Model Selection for Social Research. Sociological Methodology, 25, 111-163.