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The Dynamic (In)Efficiency of Monetary Policy by Committee Author info | Abstract | Publisher info | Download info | Related research | Statistics ALESSANDRO RIBONI
FRANCISCO J. RUGE-MURCIA
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This paper develops a model where the value of the monetary policy instrument is selected by a heterogenous committee engaged in a dynamic voting game. Committee members differ in their institutional power, and in certain states of nature, they also differ in their preferred instrument value. Preference heterogeneity and concern for the future interact to generate decisions that are dynamically inefficient and inertial around the previously agreed instrument value. This model endogenously generates autocorrelation in the policy variable and helps explain the empirical observation that the distribution of actual interest rate changes has a mode of zero. Copyright (c) 2008 The Ohio State University.
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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking .
Volume (Year): 40 (2008)
Issue (Month): 5 (08)
Pages: 1001-1032
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Handle: RePEc:mcb:jmoncb:v:40:y:2008:i:5:p:1001-1032Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Richard Clarida & Jordi Gali & Mark Gertler, 1999.
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Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective ,"
CEPR Discussion Papers
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"The Science of Monetary Policy: A New Keynesian Perspective ,"
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repec:bep:maccon:v:3:y:2003:i:1:p:1073-1073 is not listed on IDEAS
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Carlos Montoro, 2007.
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Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2008.
"How monetary policy committees impact the volatility of policy rates ,"
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Helge Berger & Volker Nitsch & Tonny Lybek, 2006.
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Helge Berger & Volker Nitsch & Tonny Lybek, 2007.
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CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!] Berger, Helge & Nitsch, Volker & Lybek, Tonny, 2008.
"Central bank boards around the world: Why does membership size differ? ,"
European Journal of Political Economy ,
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[Downloadable!] (restricted) Helge Berger, 2006.
"Optimal Central Bank Design: Benchmarks for the ECB ,"
CESifo Working Paper Series
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Carlos Montoro, 2007.
"Why Central Banks Smooth Interest Rates? A Political Economy Explanation ,"
Working Papers
2007-003, Banco Central de Reserva del Perú.
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Brooks, Robert & Harris, Mark & Spencer, Christopher, 2007.
"An Inflated Ordered Probit Model of Monetary Policy: Evidence from MPC Voting Data ,"
MPRA Paper
8509, University Library of Munich, Germany.
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Helge Berger & Volker Nitsch, 2008.
"Too Many Cooks? Committees in Monetary Policy ,"
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08-195, KOF Swiss Economic Institute, ETH Zurich.
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