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Central Banks' Voting Records and Future Policy

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  • Roman Horvath
  • Katerina Smidkova
  • Jan Zapal

Abstract

We assess whether the voting records of central bank boards are informative about future monetary policy. First, we specify a theoretical model of central bank board decision-making and simulate the voting outcomes. Three different versions of model are estimated with simulated data: 1) democratic, 2) consensual and 3) opportunistic. These versions differ in the extent to which the chairman and other board members exchange information prior to the voting. The model shows that the voting pattern is informative about future monetary policy provided that the signals about the optimal policy rate are noisy and that there is sufficient independence in voting across the board members, which is in line with the democratic version. Next, the model predictions are tested on real data on six countries (the Czech Republic, Hungary, Poland, Sweden, the United Kingdom and the United States). Subject to various sensitivity tests, it is found that the democratic version of the model corresponds best to the real data and that in all countries the voting records are informative about future monetary policy, making a case for publishing the records.

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Bibliographic Info

Paper provided by Czech National Bank, Research Department in its series Working Papers with number 2010/11.

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Date of creation: Dec 2010
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Handle: RePEc:cnb:wpaper:2010/11

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Keywords: Collective decision-making; monetary policy; transparency; voting record.;

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Citations

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Cited by:
  1. Roman Horvath & Katerina Smidkova & Jan Zapal, 2010. "Central Banks' Voting Records and Future Policy," Working Papers 2010/11, Czech National Bank, Research Department.
  2. A. Jung, 2013. "Policymakers’ Interest Rate Preferences: Recent Evidence for Three Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 9(3), pages 150-197, September.
  3. Roman Horvath & Katerina Smidkova & Jan Zapal, 2012. "Is the U.S. Fed Voting Record Informative about Future Monetary Policy?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(6), pages 478-484, December.
  4. Horvath, Roman & Rusnak, Marek & Smidkova, Katerina & Zapal, Jan, 2011. "Dissent voting behavior of central bankers: what do we really know?," MPRA Paper 34638, University Library of Munich, Germany.
  5. Eijffinger, S.C.W. & Mahieu, R.J. & Raes, L.B.D., 2013. "Estimating the Preferences of Central Bankers: An Analysis of Four Voting Records," Discussion Paper 2013-047, Tilburg University, Center for Economic Research.

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