Regional House Price Dynamics and Voting Behavior in the FOMC

21 Pages Posted: 26 Feb 2014

See all articles by Stefan Eichler

Stefan Eichler

Leibniz Universität Hannover; Halle Institute for Economic Research

Tom Lähner

Dresden University of Technology - Faculty of Economics and Business Management

Date Written: April 2014

Abstract

This paper examines the impact of house price gaps in Federal Reserve districts on the voting behavior in the Federal Open Market Committee (FOMC) from 1978 to 2010. Applying a random effects ordered probit model, we find that a higher regional house price gap significantly increases (decreases) the probability that this district's representative in the FOMC casts interest rate votes in favor of tighter (easier) monetary policy. In addition, our results suggest that Bank presidents react more sensitively to regional house price developments than Board members do.

JEL Classification: E31, E58, R31

Suggested Citation

Eichler, Stefan and Lähner, Tom, Regional House Price Dynamics and Voting Behavior in the FOMC (April 2014). Economic Inquiry, Vol. 52, Issue 2, pp. 625-645, 2014, Available at SSRN: https://ssrn.com/abstract=2401376 or http://dx.doi.org/10.1111/ecin.12050

Stefan Eichler (Contact Author)

Leibniz Universität Hannover

Institute of Money and International Finance
Koenigsworther Platz 1
Hannover, 30167
Germany

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Tom Lähner

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

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