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Too many Cooks? Committees in Monetary Policy

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  • Helge Berger
  • Volker Nitsch

Abstract

How many people should decide about monetary policy? In this paper, we take an empirical perspective on this issue, analyzing the relationship between the number of monetary policy decision-makers and monetary policy outcomes. Using a new data set that characterizes Monetary Policy Committees (MPCs) in more than 30 countries from 1960 through 2000, we find a U-shaped relation between the membership size of MPCs and inflation; our results suggest that the lowest level of inflation is reached at MPCs with about seven to ten members. Similar results are obtained for other measures, such as inflation variability and output growth. We also find that MPC size influences the success of monetary targeting regimes. In contrast, there is no evidence that either turnover rates of MPC members or the membership composition of MPCs affect economic outcomes.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2008/wp-cesifo-2008-04/cesifo1_wp2274.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2274.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2274

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Keywords: central bank design; monetary policy committee; central bank board; central bank council; governance; inflation;

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References

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  6. Helge Berger & Tonny Lybek & Volker Nitsch, 2006. "Central Bank Boards Around the World: Why Does Membership Size Differ?," IMF Working Papers 06/281, International Monetary Fund.
  7. Dreher, Axel & Sturm, Jan-Egbert & de Haan, Jakob, 2008. "Does high inflation cause central bankers to lose their job? Evidence based on a new data set," European Journal of Political Economy, Elsevier, vol. 24(4), pages 778-787, December.
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Citations

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Cited by:
  1. Esteban Colla De Robertis & Last: Colla De Robertis, 2010. "Monetary Committee Size and Special Interest Influence," Documentos de Investigación - Research Papers 2, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
  2. Helge Berger & Tonny Lybek & Volker Nitsch, 2006. "Central Bank Boards Around the World: Why Does Membership Size Differ?," IMF Working Papers 06/281, International Monetary Fund.
  3. Niklas Potrafke, 2013. "Minority positions in theGerman Council of Economic Experts: A political economic analysis," Ifo Working Paper Series Ifo Working Paper No. 160, Ifo Institute for Economic Research at the University of Munich.
  4. Daniel Seidmann, 2011. "A theory of voting patterns and performance in private and public committees," Social Choice and Welfare, Springer, vol. 36(1), pages 49-74, January.
  5. Harald Badinger & Volker Nitsch, 2011. "National Representation in Multinational Institutions: The Case of the European Central Bank," CESifo Working Paper Series 3573, CESifo Group Munich.
  6. Badinger, Harald & Nitsch, Volker, 2014. "National representation in supranational institutions: The case of the European Central Bank," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 19-33.
  7. Etienne Farvaque & Hakim Hammadou & Piotr Stanek, 2011. "Selecting Your Inflation Targeters: Background and Performance of Monetary Policy Committee Members," German Economic Review, Verein für Socialpolitik, vol. 12(2), pages 223-238, 05.

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