A MULTINOMINAL LOGIT ANALYSIS OF THE INFLUENCE OF POLICY VARIABLES AND BOARD EXPERIENCE ON FOMC VOTING-BEHAVIOR

Previous studies have used probit or legit models to analyze two state s of monetary policy (tighter or looser). Tn this paper we employ mult inominal legit to permit Federal Reserve monetary policy to assume one of three alternative states (tighter, looser, or no change) as a func tion of three independent economic variables (unemployment, real growt h, and inflation) and the amount of experience of the Board of Governo rs. The results indicate that the Federal Reserve reacted differently under Burns, Miller and Volcker and between Volcker's two operating pr ocedures in the formulation of monetary policy.