Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve

Abstract

When central banks are transparent about their decision making, there may be clear benefits in terms of credibility, policy effectiveness, and improved democratic accountability. While recent literature has focused on all of these advantages of transparency, in this paper we consider one potential cost: the possibility that publishing detailed records of deliberations will make members of a monetary policy committee more reluctant to offer dissenting opinions. Drawing on the recent literature on expert advisors with "career concerns", we construct a model that compares incentives for members of a monetary policy committee to voice dissent when deliberations occur in public, and when they occur in private. We then test the implications of the model using an original dataset based on deliberations of the Federal Reserve's Federal Open Market Committee, asking whether the FOMC's decision in 1993 to begin releasing full transcripts of its meetings has altered incentives for participants to voice dissenting opinions. We find this to be the case with regard to both opinions on shortterm interest rates and on the "bias" for future policy.

A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members

“…1 Chappell et al (1993) find that partisan behavior is partially attributable to the career backgrounds of FOMC members, noting that "experience in government, particularly at the Federal Reserve Board, is associated with significantly stronger preferences for monetary ease" (p.130). Adolph (2005) uncovers similar findings, and more recently, Meade and Stasavage (2008) have introduced a role for career concerns, suggesting that members of a monetary policy committee are less likely to voice dissent when the transcripts of FOMC meetings are placed in the public domain. 2 As a primary motivation of this paper is to test the model of Havrilesky and Schweitzer (1990), it is to their contribution which attention now briefly turns.…”

How Transparency Kills Information Aggregation: Theory and Experiment

“…Indeed, recent theoretical literature has shown that reputational concerns influence committee behaviour differently under secrecy and transparency in the case of political committees (e.g. Stasavage (2007)), corporate boards (Malenko (2013)), and monetary policy committees (Levy (2007); Visser and Swank (2007); Swank and Visser (2013); Swank et al (2008); Meade and Stasavage (2008); Gersbach and Hahn (2008)). …”

“…Here, the argument has been made that too much transparency could be harmful (Meade and Stasavage (2008); Swank et al (2008); Swank and Visser (2013)). This debate over transparency is not a recent phenomenon.…”

Central banks' voting records, the financial crisis and future monetary policy

“…While theoretical research has mainly focused on the welfare effects of increased transparency (Morris and Shin, 2002, Angeletos and Pavan, 2007, Cornand and Heinemann, 2008, Dale et al, 2011, Hahn, 2012, empirical research has examined the implications of increased transparency with respect to monetary policy predictability (Gerlach-Kristen, 2004, Crowe, 2010, Sturm and de Haan, 2011, Horvath et al, 2012a, macroeconomic outcomes (Dincer and Eichengreen, 2014) and dissent among central bankers (Meade and Stasavage, 2008).…”