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Preference Heterogeneity in Monetary Policy Committees

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  • Riboni, Alessandro
  • Ruge-Murcia, Francesco

Abstract

This short paper employs individual voting records of the Monetary Policy Committee (MPC) of the Bank of England to study heterogeneity in policy preferences among committee members. The analysis is carried out using a simple generalization of the standard New Keynesian framework that allows members to differ in the weight they give to output compared with inflation stabilization and in their views regarding optimal inflation and natural output. Results indicate that, qualitatively, MPC members are fairly homogeneous in their policy preferences, but there are systematic quantitative differences in their policy reaction functions that are related to the nature of their membership and career background.

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File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/7717/1/SSRN-id1548069.pdf
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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/7717.

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Date of creation: 2008
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Publication status: Published in International Journal of Central Banking, 2008, Vol. 4, no. 1. pp. 213-233.Length: 20 pages
Handle: RePEc:dau:papers:123456789/7717

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Keywords: Committees; reaction functions; Bank of England;

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  1. 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.
  2. 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.
  3. Geoffrey M. B. Tootell, 1991. "Are district presidents more conservative than board governors?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-12.
  4. Havrilesky, Thomas & Gildea, John A, 1991. "The Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(1), pages 130-38, February.
  5. Alessandro Riboni & Francisco J. Ruge-Murcia, 2008. "Preference Heterogeneity in Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 213-233, March.
  6. Bennett T. McCallum & Edward Nelson, . "An Optimizing IS-LM Specification for Monetary Policy and Business Cycle Analysis," GSIA Working Papers 1997-71, Carnegie Mellon University, Tepper School of Business.
  7. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
  8. Daniel Seidmann, 2006. "A Theory of Voting Patterns and Performance in Private and Public Committees," Discussion Papers 2006-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 432-41, November.
  10. Michael Woodford, 2003. "Optimal Interest-Rate Smoothing," Review of Economic Studies, Oxford University Press, vol. 70(4), pages 861-886.
  11. 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.
  12. Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," CEPR Discussion Papers 1908, C.E.P.R. Discussion Papers.
  13. Tootell, Geoffrey M. B., 1999. "Whose monetary policy is it anyway?," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 217-235, February.
  14. Daniel Seidmann, 2006. "A Theory of Voting Patterns and Performance in Private and Public Committees," Discussion Papers 2006-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  15. Christopher Spencer, 2006. "The Dissent Voting Behaviour of Bank of England MPC Members," School of Economics Discussion Papers 0306, School of Economics, University of Surrey.
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