Does the Greenspan era provide evidence on leadership in the FOMC?

The aim of this paper is to examine whether the Federal Reserve chair has influenced the voting behaviour of the Reserve Bank Presidents. In view of data constraints, the present empirical analysis focuses on Alan Greenspan's chairmanship. Individual Taylor-type reaction functions for the Federal Reserve Districts are estimated using Presidents' interest rate preferences voiced during the second round of the internal FOMC discussions and real-time data. They show that the Federal Reserve Bank Presidents did not systematically deviate from the Chairman's reaction function. In addition, a bootstrap analysis finds that the second-round preferences of these members appear to have been influenced by a consensus enhancing factor. Overall, the empirical evidence presented in this paper is consistent with the notion that Chairman Greenspan has influenced the Reserve Bank Presidents in their voting behaviour when achieving a consensus on interest rates.