Template-Type: ReDIF-Paper 1.0
Author-Name: Carlos Madeira
Author-X-Name-First: Carlos 
Author-X-Name-Last: Madeira
Author-Name:  João Madeira 
Author-X-Name-First: João 
Author-X-Name-Last: Madeira 
Author-Name: Paulo Santos Monteiro
Author-X-Name-First: Paulo
Author-X-Name-Last: Santos Monteiro
Title: The origins of monetary policy disagreement: the role of supply and demand shocks
Abstract: We investigate how dissent in the FOMC is affected by structural macroeconomic shocks obtained using a medium-scale DSGE model. We find that dissent is less (more) frequent when demand (supply) shocks are the predominant source of inflation fluctuations. In addition, supply shocks are found to raise private sector forecasting uncertainty about the path of interest rates. Since supply shocks impose a trade-off between inflation and output stabilisation while demand shocks do not, our findings are consistent with heterogeneous preferences over the dual mandate among FOMC members as a driver of policy disagreement.
Creation-Date: 2023-08
File-URL: https://www.bis.org/publ/work1118.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1118.htm
File-Format: text/html
Number: 1118
Keywords: FOMC, committees, monetary policy, structural shocks, dissent
Classification-JEL: E52, E58, D78
Handle: RePEc:bis:biswps:1118