1

Paper

Models of Monetary Policy Decision-Making: Arthur Burns and the Federal Open Market Committee Chappell, Jr., Henry W. McGregor, Rob Roy Vermilyea, Todd Uploaded 04-01-1998 Keywords monetary policy Federal Reserve median voter Abstract This paper investigates decision-making within the Federal Open Market Committee of the Federal Reserve, focusing on the competing pressures of majority rule, consensus-building, and the power of the Chairman. To undertake this analysis, we have constructed a data set recording desired Federal funds rates for each member of the Committee over the 1970-1978 period. We empirically link individuals' policy preferences to adopted policies using generalized versions of the median voter model and alternative specifications. Our results confirm a persistent attraction of the median voter's ideal point; they also confirm a disproportionate influence of the Chairman in the policy process. The voting weight of the Chairman is estimated to be between 0.38 and 0.58 in preferred specifications. Results also suggest that district Federal Reserve Bank presidents have somewhat greater influence over adopted policies than Governors.

2

Paper

Should the Democrats move to the left on economic policy? Gelman, Andrew Uploaded 09-20-2006 Keywords median voter Presidential election public opinion spatial model of voting Abstract Could John Kerry have gained votes in the recent Presidential election by more clearly distinguishing himself from George Bush on economic policy? At first thought, the logic of political preferences would suggest not: the Republicans are to the right of most Americans on economic policy, and so in a one-dimensional space with party positions measured with no error, the optimal strategy for the Democrats would be to stand infinitesimally to the left of the Republicans. The median voter theorem suggests that each party should keep its policy positions just barely distinguishable from the opposition. In a multidimensional setting, however, or when voters vary in their perceptions of the parties' positions, a party can benefit from putting some daylight between itself and the other party on an issue where it has a public-opinion advantage (such as economic policy for the Democrats). We set up a plausible theoretical model in which the Democrats could achieve a net gain in votes by moving to the left on economic policy, given the parties' positions on a range of issue dimensions. We then evaluate this model based on survey data on voters' perceptions of their own positions and those of the candidates in 2004. Under our model, it turns out to be optimal for the Democrats to move slightly to the {em right} but staying clearly to the left of the Republicans' current position on economic issues.