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Voting Transparency in a Monetary Union

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  • Gersbach, Hans
  • Hahn, Volker

Abstract

We examine whether the central bank council of a monetary union should publish its voting records when members are appointed by national politicians. We show that the publication of voting records lowers overall welfare if the private benefits of holding office are sufficiently low. High private benefits of central bankers lower overall welfare under opacity, as they induce European central bankers to care more about being re-appointed than about beneficial policy outcomes. We show that opacity and low private benefits jointly guarantee the optimal welfare level. Moreover, we suggest that non-renewable terms for national central bankers and delegating the appointment of all council members to a European agency would be desirable.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5155.

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Date of creation: Jul 2005
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Handle: RePEc:cpr:ceprdp:5155

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Keywords: central banks; transparency voting;

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References

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  1. Hans Gersbach & Volker Hahn, 2008. "Should the individual voting records of central bankers be published?," Social Choice and Welfare, Springer, vol. 30(4), pages 655-683, May.
  2. Marvin Goodfriend, 1985. "Monetary mystique : secrecy and central banking," Working Paper 85-07, Federal Reserve Bank of Richmond.
  3. Anne Sibert, 1999. "Monetary Policy Committees: Individual and Collective Reputations," CESifo Working Paper Series 226, CESifo Group Munich.
  4. Hans Gersbach & Volker Hahn, 2004. "Voting Transparency, Conflicting Interests, And The Appointment Of Central Bankers," Economics and Politics, Wiley Blackwell, vol. 16, pages 321-345, November.
  5. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-77, August.
  6. Mike Felgenhauer & Hans Peter Grüner, 2008. "Committees and Special Interests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(2), pages 219-243, 04.
  7. Huefner, Felix P & Friedrich Heinemann, 2003. "Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy," Royal Economic Society Annual Conference 2003 110, Royal Economic Society.
  8. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
  9. Waller, Christopher J & Walsh, Carl E, 1996. "Central-Bank Independence, Economic Behavior, and Optimal Term Lengths," American Economic Review, American Economic Association, vol. 86(5), pages 1139-53, December.
  10. Christopher J. Waller, 2000. "Policy Boards And Policy Smoothing," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 305-339, February.
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Citations

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Cited by:
  1. Carin van der Cruijsen & Sylvester Eijffinger, 2007. "The economic impact of central bank transparency: a survey," DNB Working Papers 132, Netherlands Central Bank, Research Department.
  2. Alex Cukierman, 2007. "The limits of transparency," Proceedings, Federal Reserve Bank of San Francisco.
  3. Volker Hahn, 2012. "Designing Monetary Policy Committees," Working Paper Series of the Department of Economics, University of Konstanz 2012-23, Department of Economics, University of Konstanz.
  4. Geraats, P.M., 2005. "Political Pressures and Monetary Mystique," Cambridge Working Papers in Economics 0557, Faculty of Economics, University of Cambridge.
  5. Volker Hahn, 2009. "Why the Publication of Socially Harmful Information May Be Socially Desirable," CER-ETH Economics working paper series 09/122, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  6. Bernd Hayo & Ummad Mazhar, 2011. "Monetary Policy Committee Transparency: Measurement,Determinants, and Economic Effects," MAGKS Papers on Economics 201140, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  7. Petra M. Geraats, 2006. "Transparency of Monetary Policy: Theory and Practice," CESifo Economic Studies, CESifo, vol. 52(1), pages 111-152, March.
  8. Volker Hahn, 2013. "Committee Design with Endogenous Participation," Working Paper Series of the Department of Economics, University of Konstanz 2013-12, Department of Economics, University of Konstanz.
  9. Petra M. Geraats, 2008. "ECB Credibility and Transparency," European Economy - Economic Papers 330, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  10. Esteban Colla De Robertis & Last: Colla De Robertis, 2010. "Monetary policy committees and the decision to publish voting records," Documentos de Investigación - Research Papers 1, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
  11. Ellen Meade, 2006. "Dissent and Disagreement on the Fed's FOMC: Understanding Regional Affiliations and limits to Transparency," DNB Working Papers 094, Netherlands Central Bank, Research Department.

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