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Monetary policy deliberations: committee size and voting rules

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  • Maurin, Vincent
  • Vidal, Jean-Pierre
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    Abstract

    How large should a monetary policy committee be? Which voting rule should a monetary policy committee adopt? This paper builds on Condorcet's jury threorem to analyse the relationships between committee size and voting rules in a model where policy discussions are subject to a time constraint. It suggests that in large committees majority voting is likely to enhance policy outcomes. Under unanimity (consensus) it is preferable to limit the size of the committee. Finally, supermajority voting rules are social contrivances that contribute to policy performance in a more uncertain environment, when initial policy proposals are less likely to be correct, or when payoffs are asymmetric. JEL Classification: D71, D78, D81, E58

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    Bibliographic Info

    Paper provided by European Central Bank in its series Working Paper Series with number 1434.

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    Date of creation: May 2012
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    Handle: RePEc:ecb:ecbwps:20121434

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    Related research

    Keywords: Collective decision‐making; deliberations; optimal committee sizing; voting rules;

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    1. Gerlach-Kristen, Petra, 2005. "Too little, too late: Interest rate setting and the costs of consensus," Economics Letters, Elsevier, vol. 88(3), pages 376-381, September.
    2. Besley, Timothy & Meads, Neil & Surico, Paolo, 2007. "Insiders versus Outsiders in Monetary Policy-Making," Discussion Papers 20, Monetary Policy Committee Unit, Bank of England.
    3. Bhattacharjee, Arnab & Holly, Sean, 2009. "Understanding Interactions in Social Networks and Committees," SIRE Discussion Papers 2009-53, Scottish Institute for Research in Economics (SIRE).
    4. Riboni, Alessandro & Ruge-Murcia, Francesco, 2008. "Preference Heterogeneity in Monetary Policy Committees," Economics Papers from University Paris Dauphine 123456789/7717, Paris Dauphine University.
    5. Berk, Jan Marc & Bierut, Beata K., 2011. "Communication in a monetary policy committee," European Journal of Political Economy, Elsevier, vol. 27(4), pages 791-801.
    6. Stephen Hansen & Michael McMahon, 2011. "How Experts Decide: Identifying Preferences versus Signals from Policy Decisions," CEP Discussion Papers dp1063, Centre for Economic Performance, LSE.
    7. Claussen , Carl Andreas & Røisland, Øistein, 2010. "The Discursive Dilemma in Monetary Policy," Working Paper Series 240, Sveriges Riksbank (Central Bank of Sweden).
    8. Gerardi, Dino & Yariv, Leeat, 2007. "Deliberative voting," Journal of Economic Theory, Elsevier, vol. 134(1), pages 317-338, May.
    9. Jan Marc Berk & Beata K. Bierut, 2003. "Committee structure and its implications for Monetary policy decision-making," MEB Series (discontinued) 2003-05, Netherlands Central Bank, Monetary and Economic Policy Department.
    10. Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2008. "How monetary policy committees impact the volatility of policy rates," Working Papers CEB 08-026.RS, ULB -- Universite Libre de Bruxelles.
    11. Kirman, Alan, 1993. "Ants, Rationality, and Recruitment," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 137-56, February.
    12. Bauke Visser & Otto H Swank, 2007. "On Committees of Experts," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 337-372, 02.
    13. Alan S. Blinder, 2005. "Monetary Policy by Committee: Why and How?," Working Papers 84, Princeton University, Department of Economics, Center for Economic Policy Studies..
    14. Christopher Spencer, 2005. "Consensus Formation in Monetary Policy Committees," School of Economics Discussion Papers 1505, School of Economics, University of Surrey.
    15. Keiichi Morimoto, 2010. "Coordination Behavior and Optimal Committee Size," Discussion Papers in Economics and Business 10-02, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    16. Jan Marc Berk & Beata K. Bierut, 2005. "Communication in Monetary Policy Committees," DNB Working Papers 059, Netherlands Central Bank, Research Department.
    17. Petra Gerlach-Kristen, 2008. "The Role of the Chairman in Setting Monetary Policy: Individualistic vs. Autocratically Collegial MPCs," International Journal of Central Banking, International Journal of Central Banking, vol. 4(3), pages 119-143, September.
    18. Philippe Moutot & Alexander Jung & Francesco Paolo Mongelli, 2008. "The working of the eurosystem - monetary policy preparations and decision-making – selected issues," Occasional Paper Series 79, European Central Bank.
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    Cited by:
    1. Tim Aldridge & Amy Wood, 2014. "Monetary policy decision-making and accountability structures: some cross-country comparisons," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-30, March.

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