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The Role of the Chairman in Setting Monetary Policy: Individualistic vs. Autocratically Collegial MPCs

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  • Petra Gerlach-Kristen

    (Swiss National Bank and University of Basel)

Abstract

This paper models the role of the Chairman in the decision making of individualistic and autocratically collegial monetary policy committees, assuming that uncertainty about the optimal interest rate causes policymakers’ views to differ and that they are unable to communicate their opinions perfectly. The Chairman’s ability to moderate the discussion and his economic skills—and, in an autocratically collegial committee, the authority arising from his position—impact the path of interest rates and the distribution of votes. Simulations suggest that his influence on the quality of policy itself is limited and that interest rate setting is only slightly worse in an autocratically collegial setup. The Chairman’s main impact is to help build consensus in the committee, which enhances the credibility of monetary policy.

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Bibliographic Info

Article provided by International Journal of Central Banking in its journal International Journal of Central Banking.

Volume (Year): 4 (2008)
Issue (Month): 3 (September)
Pages: 119-143

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Handle: RePEc:ijc:ijcjou:y:2008:q:3:a:5

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Cited by:
  1. Roman Horváth & Katerina Šmídková & Jan Zápal, 2012. "Central Banks' Voting Records and Future Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 8(4), pages 1-19, December.
  2. Farvaque, Etienne & Matsueda, Norimichi & Méon, Pierre-Guillaume, 2009. "How monetary policy committees impact the volatility of policy rates," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 534-546, December.
  3. Peter Tillmann, 2010. "Strategic Forecasting on the FOMC," MAGKS Papers on Economics 201017, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. Maurin, Vincent & Vidal, Jean-Pierre, 2012. "Monetary policy deliberations: committee size and voting rules," Working Paper Series 1434, European Central Bank.
  5. Peter Tillmann, 2010. "Monetary Policy Committees and Model Uncertainty," MAGKS Papers on Economics 201021, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  6. Carl Andreas Claussen & Egil Matsen & Øistein Røisland & Ragnar Torvik, 2009. "Overconfidence, Monetary Policy Committees and Chairman Dominance," Working Paper 2009/17, Norges Bank.
  7. Michael Ehrmann & Marcel Fratzscher, 2013. "Dispersed communication by central bank committees and the predictability of monetary policy decisions," Public Choice, Springer, vol. 157(1), pages 223-244, October.
  8. Christian Pierdzioch & Jan-Christoph Rülke & Peter Tillmann, 2013. "Using forecasts to uncover the loss function of FOMC members," MAGKS Papers on Economics 201302, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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