Inconsistent voting behavior in the FOMC

This paper examines determinants of inconsistent voting behavior in the Federal Open Market Committee (FOMC). Inconsistent voting behavior is defined as a changing preference on the preferred interest rate voiced in the policy go-around relative to the interest rate preference cast in the formal voting. It is hypothesized that the change in transparency in 1993 as well as individual characteristics of FOMC members may play a significant role in inconsistent voting behavior. Using FOMC voting data extracted from verbatim transcripts from 1989 until 2008 results can be summarized as follows: The regime shift in transparency has a significant impact on the probability of casting inconsistent votes. After 1993, the probability of casting inconsistent votes decreases significantly, on average by 3.3%. FOMC members with longer tenure on the committee have a lower probability of casting inconsistent votes. Further results suggest that Board members and bank presidents differ significantly, with bank presidents casting inconsistent votes more often than Board members do. This relation holds true for gender as well, with female members casting more inconsistent votes than males. In addition, political aspects and career backgrounds also contribute to explaining inconsistent voting behavior in the FOMC. Conditional effects reveal that after the change in transparency differences between Board members and bank presidents remain, whereas differences between male and female members have diminished. Further results suggest that FOMC members with a career in the government sector have been strongly affected by the regime shift in transparency.