Voting Rights and the Volatility Content of Federal Reserve Communication

Abstract

Formal voting authority can matter even when it does not visibly change what a central banker says. We exploit the mechanical annual rotation of voting rights among Federal Reserve Bank presidents and ask whether otherwise comparable public language receives a different loading in a persistent component of U.S. equity variance when it carries voting authority. The sample contains 819 eligible speeches by 21 presidential officeholders over 2015-2023 and 71 scheduled meeting cycles. Using an archived Yahoo Finance S&P 500 price tape and strictly lagged realized variance, the interaction between uncertainty/modal communication and statutory voting exposure is negative (delta = -0.461; likelihoodratio p = 0.0007). Meeting-cycle clustering yields p = 0.037, while a 9,999-draw restricted wild-score bootstrap yields p = 0.084 two-sided and p = 0.042 for the prespecified negative direction. The estimate is unchanged in a fixed equal-weight 66-day benchmark and remains negative across 44, 66, 88, and 132 return lags. A 500-draw random-group placebo reaches the observed absolute interaction in 4.6 percent of draws. The interaction is null at individual speech dates. A zero-inclusive selection audit finds no extensive-margin or timing shift, although voting officeholders give about 0.19 more speeches per cycle (wild-cluster p = 0.075). Voting status does not robustly change language under equal-weight officeholder-year inference, and rotating-district unemployment does not explain collective statements. The contribution is therefore an aggregation-specific authorization result with borderline finite-cluster inference, not a claim that rotation mechanically rewrites the Committee's statement.

Author abstract from the research manuscript. Typography and line breaks have been normalized; the linked source may show a different manuscript version.