Jan Zapal

The dissent voting behaviour of central bankers: what do we really know?

We examine the determinants of the dissent in central bank boards voting records about monetary policy rates in the Czech Republic, Hungary, Sweden, the UK and the US. In contrast to previous studies, we consider 25 different macroeconomic, financial, institutional, psychological or preference-related factors jointly and use Bayesian model averaging (BMA) to formally assess the attendant model uncertainty. We find that the rate of dissent is between 5% and 20% for the examined central banks. Our results suggest that most of the examined regressors, including factors that capture the effects of inflation and output, are not robust determinants of voting dissent. This result suggests that unobserved characteristics of central bankers and different communication strategies drive the dissent, rather than the level of macroeconomic uncertainty.

Voting in Central Banks: Theory versus Stylized Facts

Abstract The paper examines the ability of several alternative group decision-making models to generate proposing, voting and decision patterns matching those observed in the Bank of England’s Monetary Policy Committee and the US Federal Reserve’s Federal Open Market Committee. A decision-making procedure, common to all the models, is to vote between adoption of the chairman’s proposal and retention of the status-quo policy, with heterogeneous votes generated by private information of the models’ monetary policy committee members. The members can additionally express reservations regarding the final committee decision. The three alternative models differ in the degree of informational influence between the chairman and the remaining members. We find that a “supermajoritarian” model, in which the chairman proposes a policy she knows would be accepted by a supermajority of the committee members, combined with allowance for reservations, closely replicates real-world decision-making patterns. The model predicts no rejections of chairman’s proposals, low but non-trivial dissent, even during meetings where the chairman proposes no change in policy, and predictive power of the voting record of the whole committee regarding future monetary policy changes.