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Communication, Decision making, and the Optimal Degree of Transparency of Monetary Policy Committees

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  • Anke Weber

    (International Monetary Fund)

Abstract

This paper develops a theoretical model of a monetary policy committee with heterogeneous members whose decisions and public communications are observed by the financial markets. It thereby provides a link between the literatures on monetary policy committees and central bank communication. The results show that transparency about the different views among committee members surrounding the economic outlook is beneficial. However, communicating the diversity of views about the monetary policy decision may not be welfare enhancing, at least in the short term. These results support previous empirical findings and have strong implications for how committees should communicate.

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Bibliographic Info

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

Volume (Year): 6 (2010)
Issue (Month): 3 (September)
Pages: 1-49

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Handle: RePEc:ijc:ijcjou:y:2010:q:3:a:1

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  1. Petra Gerlach-Kristen, 2009. "Outsiders at the Bank of England's MPC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(6), pages 1099-1115, 09.
  2. Helge Berger & Volker Nitsch & Tonny Lybek, 2007. "Central Bank Boards around the World: Why does Membership Size Differ?," CESifo Working Paper Series 1897, CESifo Group Munich.
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Cited by:
  1. Roman Horváth & Kateřina Šmídková & Jan Zápal, 2012. "Central Banks' Voting Records and Future Policy," Working Papers 316, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Petra Gerlach-Kristen, 2008. "The Role of the Chairman in Setting Monetary Policy: Individualistic vs. Autocratically Collegial MPCs," International Journal of Central Banking, International Journal of Central Banking, vol. 4(3), pages 119-143, September.
  3. Riboni, Alessandro & Ruge-Murcia, Francesco, 2010. "Monetary Policy by Committee : Consensus, Chairman Dominance or Simple Majority ?," Economics Papers from University Paris Dauphine 123456789/7683, Paris Dauphine University.
  4. Petra Geraats, 2014. "Monetary Policy Transparency," CESifo Working Paper Series 4611, CESifo Group Munich.
  5. Wojciech Charemza & Daniel Ladley, 2012. "MPC Voting, Forecasting and Inflation," Discussion Papers in Economics 12/23, Department of Economics, University of Leicester, revised Jan 2013.

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