Do Federal Reserve Presidents Communicate with a Regional Bias?

MAGKS Discussion Paper No. 03-2011

22 Pages Posted: 13 Feb 2011 Last revised: 14 Jul 2012

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Matthias Neuenkirch

University of Trier - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 13, 2012

Abstract

In this paper, we analyze the determinants of U.S. monetary policy stance as expressed in speeches by Federal Reserve (Fed) officials over the period January 1998 to September 2009. Econometrically, we use a probit model with regional and national macroeconomic variables to explain the content of these speeches. Our results are, first, that Fed governors and presidents follow a Taylor rule when expressing their opinions: a rise in inflation or the Leading Index makes a hawkish speech more likely. Second, when Fed presidents make a speech in their home district, its content is influenced by both regional and national macroeconomic variables, whereas speeches given outside the home district are influenced solely by national information. Third, the influence of regional variables increases during (i) Ben Bernanke’s tenure as Fed Chairman, (ii) recessions, and (iii) the financial crisis. Finally, speeches by nonvoting presidents reflect regional economic development to a greater extent than those by voting presidents.

Keywords: Central Bank Communication, Disagreement, Federal Reserve, Monetary Policy, Regional Representation, Speeches

JEL Classification: D72, E52, E58

Suggested Citation

Hayo, Bernd and Neuenkirch, Matthias, Do Federal Reserve Presidents Communicate with a Regional Bias? (July 13, 2012). MAGKS Discussion Paper No. 03-2011. Available at SSRN: https://ssrn.com/abstract=1759923 or http://dx.doi.org/10.2139/ssrn.1759923

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universitaetsstr. 24
Marburg, D-35032
Germany
++49(0)6421-28-23091 (Phone)
++49(0)6421-28-23193 (Fax)

Matthias Neuenkirch

University of Trier - Faculty of Economics ( email )

Universitätsring 15
Trier, 54296
Germany
+49 - (0)651 - 201 - 2629 (Phone)

HOME PAGE: http://www.uni-trier.de/index.php?id=50130

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
42
Abstract Views
458
PlumX Metrics