Event Details

Accounting and Finance, Finance Research Seminar by Nancy Xu, Boston College. Paper title: Do the Voting Rights of Federal Reserve Bank Presidents Matter?

Nancy R. Xu (nancyxu.net)

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.