شرایط منطقه ای اقتصادی و سیاست پولی

We use county-level unemployment data and data derived from FOMC meeting transcripts to test the hypothesis that monetary policymakers are influenced by economic conditions in regions that they represent. The analysis confirms that regional conditions affect the policy preferences of Reserve Bank presidents. Regional conditions also appear to influence Governors, but the evidence is weaker. For all FOMC members, we find that national conditions matter more than regional conditions; however, we are unable to verify that the evolving regional composition of the Committee's voting membership has any effect on the adopted policy stance.

Monetary policy decisions in a number of countries are now made by committees whose members have regional affiliations. The increasing prevalence of monetary policy committees has prompted a significant amount of research that compares committee decision-making to individual decision-making. For example, Blinder and Morgan, 2005, Gerlach-Kristen, 2006 and Lombardelli et al., 2005 argue that committee decisions are superior to individual decisions.3 Whether regional representation improves the quality of committee decisions is less clear. Because monetary policy cannot be targeted to produce different effects across regions, most economists would argue that policy choices should be based on aggregate economic conditions rather than regional ones. However, Berger, 2006 and Goodfriend, 2000 have argued that regional representation may result in an increase in the information available to a monetary policy committee, thereby improving its decisions.4 Regional representation is, in any case, an important attribute of institutional arrangements in both the United States and Europe. At the European Central Bank (ECB), the Governing Council includes the governors of the national central banks from euro-area countries, as well as members of the Executive Board. At the Federal Reserve, the voting membership of the Federal Open Market Committee (FOMC) consists of five presidents of regional Federal Reserve Banks and the seven members of the Board of Governors. The Reserve Bank presidents have clear regional affiliations. Perhaps less well known is that members of the Board of Governors must come from different Federal Reserve districts. Thus, both Reserve Bank presidents and Governors can be considered regional representatives. Several previous studies have examined how regional representation has affected monetary policy decisions. Berger and De Haan (2002) have shown that economic differences across German states affected the voting behavior of regional representatives on the Bundesbank's Governing Council during the 1948–1961 period. Although the absence of voting records makes an analysis of individual ECB policymakers impossible, Heinemann and Huefner (2004) have reported evidence supporting the view that country-specific economic considerations affected ECB policy outcomes over the early years of the euro (1999–2002).5 For the United States, Gildea (1992) and Meade and Sheets (2005) have found that FOMC members respond to regional conditions when they vote on policy directives, but Tootell (1991) has concluded that they do not. In this paper, we reconsider the influence of regional economic conditions on the policy preferences of individual FOMC members and on the monetary policy stance adopted by the Committee. Our analysis is distinguished by two improvements to the data that have been used in earlier studies. First, we have supplemented formal FOMC voting records with more nuanced information gleaned from transcripts of meeting proceedings. Second, we have used measures of regional economic conditions that have been appropriately aggregated to the Federal Reserve district level from the original county-level observations. To take advantage of these data improvements, we focus our attention on the 1987–1999 portion of Alan Greenspan's chairmanship.6 With more precisely-measured indicators of decision-makers' preferences and more accurately matched regional economic data, it should be possible to make more reliable inferences about the effects of regional economic conditions on monetary policy choices. Our analysis will focus on three questions. First, do regional economic conditions influence the policies advocated by individual FOMC members? Second, if regional conditions matter, do they matter in the same way for Governors and Reserve Bank presidents? Finally, if regional conditions shape individuals' policy preferences, do changes over time in the regional composition of the Committee's voting membership affect the stance of monetary policy? Although our empirical analysis is limited to the Federal Reserve, we will briefly consider what implications our results might have for the European Central Bank. The remainder of our paper is organized as follows. In Section 2, we review the role of regional considerations in the Federal Reserve's organizational structure and examine previous work on the influence of regional conditions on monetary policy decisions. In Section 3, we describe our data on FOMC members' monetary policy preferences and regional economic conditions. We present our empirical models and results in Section 4 and offer concluding comments in Section 5.

We have investigated the influence of regional economic conditions on FOMC members' monetary policy preferences. To do so, we have used FOMC meeting transcripts to identify member preferences, and we have carefully matched regional economic data to Federal Reserve district boundaries. Our results suggest three conclusions. First, regional economic conditions influence FOMC members' preferred policies, but have smaller effects than comparable national-level indicators. Second, while our evidence suggests that both Governors and Reserve Bank presidents respond to regional conditions, the evidence is stronger for the presidents. Third, while regional conditions affect policy preferences at the individual level, there is little support for the proposition that changes in the regional composition of the FOMC's voting membership have systematically affected the monetary policy stance adopted by the Committee. Our findings may have implications for European monetary policy. A priori, it seems likely that regional influences would be at least as strong for Europe as for the United States. First, the national loyalties of the ECB's Governing Council members are presumably stronger than the regional loyalties of FOMC members. Second, the aggregate voting weight attributed to regional representatives is larger in Europe than in the United States. The Governing Council includes the six members of the Executive Board and the governors of the central banks in the 13 countries that have adopted the euro. Because each member of the Governing Council currently has a vote on the monetary policy decision, the national central banks have a 13-6 majority in Council votes. 23 Third, regional voting weights in Europe represent neither population nor economic activity as closely as in the United States, so regional biases in adopted policies are more likely. Although institutional arrangements might increase the importance of regional influences over monetary policy in Europe, two arguments still weigh against an important regional bias. First, our evidence for the Federal Reserve shows that aggregate economic conditions are much more important than regional conditions in determining the decisions of individual policymakers. Second, despite the fundamental role of regional representation, the Maastricht Treaty directs members of the ECB to pursue the objectives of the Community as a whole and specifically prohibits them from seeking or following instructions from governments of member states.