Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2021-06-05
Number: 21-050/VII
Author-Name: Michael Ehrmann
Author-Workplace-Name: European Central Bank
Author-Name: Robin Tietz
Author-Workplace-Name: Cass Business School
Author-Name: Bauke Visser
Author-Workplace-Name: Erasmus University Rotterdam
Title: Voting right rotation, behavior of committee members and financial market reactions: Evidence from the U.S. Federal Open Market Committee
Abstract: Whether Federal Reserve Bank presidents have the right to vote on the U.S. monetary policy committee depends on a mechanical, yearly rotation scheme. Rotation is without exclusion: also nonvoting presidents attend and participate in the meetings of the committee. Does voting status change behavior? We find that the data go against the hypothesis that without the voting right, presidents use their public speeches and their meeting interventions to compensate for the loss of formal influence; rather, they support the hypothesis that the voting right makes presidents more involved. We also find that speeches move financial markets less in years that presidents vote. We argue that these discounts are consistent with their communication behavior.
Classification-JEL: E58, D71, D72
Keywords: voting right rotation, monetary policy committee, central bank communication, FOMC, financial market response
File-URL: https://papers.tinbergen.nl/21050.pdf
File-Format: application/pdf
File-Size: 1.407.349 bytes
Handle: RePEc:tin:wpaper:20210050