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Communication in Monetary Policy Committees

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  • Jan Marc Berk
  • Beata K. Bierut

Abstract

This paper models monetary policy decisions as being taken by an interacting group of heterogeneous policy makers, organized in a MPC. We show that communication between members generally improves the quality of monetary policy by increasing knowledge about uncertain future economic developments. Interestingly, we find that it is sometimes beneficial to restrict communication to a subset of MPC members. We also show that the optimal size of a communicating MPC is generally smaller than otherwise. Compared with expanding the MPC, communication is a cost-e.ective way of increasing the quality of monetary policy.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 059.

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Date of creation: Nov 2005
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Handle: RePEc:dnb:dnbwpp:059

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Keywords: monetary policy committees; deliberations; voting;

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References

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  19. Otto H. Swank & Phongthorn Wrasai, 2002. "Deliberation, Information Aggregation and Collective Decision Making," Tinbergen Institute Discussion Papers 02-006/1, Tinbergen Institute, revised 03 Dec 2002.
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Citations

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Cited by:
  1. Niklas Potrafke, 2013. "Minority Positions in the German Council of Economic Experts: A Political Economic Analysis," CESifo Working Paper Series 4206, CESifo Group Munich.
  2. Roman Horváth & Kateøina Šmídková & Jan Zápal & Marek Rusnák, 2012. "Dissent Voting Behavior of Central Bankers: What Do We Really Know?," Working Papers IES 2012/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2012.
  3. Jürgen Stark & Alexander Jung & Francesco Paolo Mongelli, 2012. "Normal Times versus Crisis Times," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(1), pages 03-09, 04.
  4. Maurin, Vincent & Vidal, Jean-Pierre, 2012. "Monetary policy deliberations: committee size and voting rules," Working Paper Series 1434, European Central Bank.
  5. Wojciech Charemza & Daniel Ladley, 2012. "MPC Voting, Forecasting and Inflation," Discussion Papers in Economics 12/23, Department of Economics, University of Leicester, revised Jan 2013.
  6. 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.

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