Inferring hawks and doves from voting records

(De meest actuele versie van onze paper – maart 2017 – is online beschikbaar via sciencedirect.com)

Sylvester Eijffinger (a), Ronald Mahieu (b) and Louis Raes (c)

Highlights
• Industry career background is associated with more hawkish preferences.
• NGO career background is associated with more dovish preferences.
• Extreme ideal points (both dovish and hawkish) are associated with external members.
• Extensive model checking procedures.

Abstract
We analyze revealed policy preferences of the Monetary Policy Committee of the Bank of England. From the voting records we estimate the policy preferences with spatial models of voting. We find that internal committee members tend to hold centrist policy preferences, while more extreme policy preferences, both hawkish and dovish, are generally held by external members. An industry background is associated with more hawkish preferences.

Conclusion
Our ideal-point estimates strongly suggest that the most dovish and the most hawkish positions on the dove-hawk dimension are occupied by externals. We also investigate whether voting members with different career backgrounds tend to hold different policy preferences. We find that voting members with different career backgrounds categories have similar preferences except those with career experience in industry.

An overview of the literature on voting at central banks by Sibert (2006) suggests that central bank committees should be designed such that members do not act as part of a group, perhaps by including members from outside the central bank. Our findings resonate with this suggestion, as we find indeed that members with career experience at the central bank tend to exhibit the lowest heterogeneity in preferences. In contrast, academics (predominantly found among externals) have more differing policy preferences than other groups (except for those with an industry background), a finding which is new to our knowledge.

These results are important in the debate on the relevance (or advantage) of having externals in a central bank committee. The Bank of England is known to have an individualistic monetary policy committee. Our results suggest that within our sample, the academics have the highest degree of individualism in central bank committees. In so far as this is desirable in the constitutional design of central bank committees, our findings can be helpful.

JEL classification: E58; E59; C11.
Keywords: Voting records; Central banking; Committees; Ideal points.
Full article (PDF)

a CentER and European Banking Center, Tilburg University, CEPR
b CentER and Netspar
c CentER and European Banking Center, Tilburg University

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