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The neutrality illusion: biased economics, biased training, and biased monetary policy. Testing the role of ideology on FOMC voting behaviour

Lepers, Etienne (2017) The neutrality illusion: biased economics, biased training, and biased monetary policy. Testing the role of ideology on FOMC voting behaviour. New Political Economy. pp. 1-23. ISSN 1356-3467

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Identification Number: 10.1080/13563467.2017.1332019

Abstract

This research is trying to shed light on two myths that are usually widespread: the first one being the idea of the academic economist as a neutral scientist finding uncontestable consensual truths, thanks to uncontestable empirical methods, the second, the idea of the central banker as a Weberian neutral bureaucrat setting aside personal beliefs to act mechanically for the common good. Deconstructing this ‘neutrality illusion’, this work argues that economics is actually a divided and ideologically marked discipline despite its aim at natural-science-type-legitimacy. It argues in a related discussion that such ideological bias also impedes a purely neutral conduct of monetary policy, undermining the very idea of central bank independence. Linking these two arguments, it argues that graduate training in economics is the first place for the formation of biased preferences, because of the substantial ideological sorting that exists across universities. Using a unique database on FOMC members’ votes and ideology, the paper tests this idea empirically and despite unavoidable caveats, finds robust evidence of a systematic impact of the ideological features of their alma mater on FOMC members’ voting behaviour – impact that we found more important than the other traditional determinants of central bankers’ actions.

Item Type: Article
Official URL: http://www.tandfonline.com/toc/cnpe20/current
Additional Information: © 2017 Informa UK Limited
Divisions: International Relations
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
J Political Science > JZ International relations
Sets: Departments > International Relations
Date Deposited: 05 Jul 2017 11:31
Last Modified: 20 Mar 2019 03:16
URI: http://eprints.lse.ac.uk/id/eprint/83172

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