Do the Voting Rights of Federal Reserve Bank Presidents Matter?

81 Pages Posted: 15 Oct 2022 Last revised: 21 Nov 2022

See all articles by Vyacheslav Fos

Vyacheslav Fos

Boston College - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Nancy R. Xu

Boston College, Carroll School of Management

Date Written: November 15, 2022

Abstract

Voting seats at FOMC meetings rotate between Reserve Bank presidents on a yearly basis. Using detailed data on 488 FOMC meetings that took place between 1969 and 2021 and predetermined rotations of voting rights, we show that economic conditions in Reserve Bank presidents' districts affect Federal funds target rates only when those presidents hold voting seats at FOMC meetings. Federal funds futures reflect this effect of local economic conditions on FOMC decisions. Supporting the voting mechanism, we show that voting presidents dissent based on economic conditions in their districts. Reserve Bank presidents' districts are more likely to be mentioned in FOMC transcripts than are the districts of non-voting presidents. Finally, we show that the path of the target rate would have been different if economic conditions in all districts affected FOMC decisions.

Keywords: Federal Reserve System, monetary policy, FOMC, voting rights, Reserve Bank presidents

JEL Classification: E52, E58, D7, G1

Suggested Citation

Fos, Vyacheslav and Xu, Nancy R., Do the Voting Rights of Federal Reserve Bank Presidents Matter? (November 15, 2022). European Corporate Governance Institute – Finance Working Paper No. 856/2022, Available at SSRN: https://ssrn.com/abstract=4230206 or http://dx.doi.org/10.2139/ssrn.4230206

Vyacheslav Fos

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Nancy R. Xu (Contact Author)

Boston College, Carroll School of Management ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

HOME PAGE: http://www.nancyxu.net

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