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Committee Structure and its Implications for Monetary Policy Decision-making


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  • Jan Marc Berk

    (De Nederlandsche Bank, and FEWEB, Vrije Universiteit Amsterdam)

  • Beata K. Bierut

    (Faculty of Economics, Erasmus University Rotterdam)


We investigate the implications for the setting of interest rateswhen monetary policy decisions are taken by a committee, in whicha subset of members may meet prior to the voting in the committeeand therefore has the possibility to reach consensus ex ante to voteunanimously ex post. We allow for different committee sizes, variousvoting rules and differences in skills among committee members. Wefind that the size of the committee is much less important in deter-mining the degree of interest rate inertia than the skills of committeemembers. Moreover, prior interaction of a subgroup only has a minoreffect on the setting of interest rates by the committee, provided thatmembers on average are equally skilled and voting takes place using asimple majority rule. If either of those assumptions are relaxed, priorinteraction has substantial effects on the setting of interest rates. Inaddition, prior interaction increases the optimal size of the Committee,ceteris paribus.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-053/2.

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Date of creation: 18 Jun 2003
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Handle: RePEc:dgr:uvatin:20030053

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Keywords: monetary policy; interest rates; voting.;

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  1. Ellen E. Meade & D. Nathan Sheets, 2002. "Regional Influences on U.S. Monetary Policy: Some Implications for Europe," CEP Discussion Papers, Centre for Economic Performance, LSE dp0523, Centre for Economic Performance, LSE.
  2. Goodfriend, Marvin, 1999. "The role of a regional bank in a system of central banks," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 51(1), pages 51-71, December.
  3. Otto H. Swank & Phongthorn Wrasai, 2002. "Deliberation, Information Aggregation and Collective Decision Making," Tinbergen Institute Discussion Papers, Tinbergen Institute 02-006/1, Tinbergen Institute, revised 03 Dec 2002.
  4. Gildea, John A, 1992. "The Regional Representation of Federal Reserve Bank Presidents," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 24(2), pages 215-25, May.
  5. Ben-Yashar, Ruth C & Nitzan, Shmuel I, 1997. "The Optimal Decision Rule for Fixed-Size Committees in Dichotomous Choice Situations: The General Result," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 175-86, February.
  6. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 21(4), pages 432-41, November.
  7. Alan S. Blinder, 1999. "Central Banking in Theory and Practice," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262522608, December.
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Cited by:
  1. Piotr Stanek, 2004. "How to assess proposals for enlargement reform of the European Central Bank," Revue de l'OFCE, Presses de Sciences-Po, Presses de Sciences-Po, vol. 91(5), pages 209-239.
  2. Jan Marc Berk & Beata K. Bierut, 2004. "The Effects of Learning in Interactive Monetary Policy Committees," Tinbergen Institute Discussion Papers, Tinbergen Institute 04-029/2, Tinbergen Institute.
  3. Carlos Montoro, 2007. "Monetary policy committees and interest rate smoothing," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19752, London School of Economics and Political Science, LSE Library.
  4. Szilárd Erhart & Jose-Luis Vasquez-Paz, 2007. "Optimal monetary policy committee size: Theory and cross country evidence," MNB Working Papers, Magyar Nemzeti Bank (the central bank of Hungary) 2007/6, Magyar Nemzeti Bank (the central bank of Hungary).
  5. Maurin, Vincent & Vidal, Jean-Pierre, 2012. "Monetary policy deliberations: committee size and voting rules," Working Paper Series, European Central Bank 1434, European Central Bank.


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