Monetary Policy Committees, Learning, and Communication
AbstractThis paper considers optimal communication by monetary policy committees in a model of imperfect knowledge and learning. The main policy implications are that there may be costs to central bank communication if the public is perpetually learning about the committee's decision-making process and policy preferences. When committee members have heterogeneous policy preferences, welfare is greater under majority voting than under consensus decision-making. Furthermore, central bank communication under majority voting is more likely to be beneficial in this case. It is also shown that a chairman with stable policy preferences who carries significant weight in the monetary policy decision-making process is welfare enhancing.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/85.
Date of creation: 01 Apr 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-CBA-2010-05-02 (Central Banking)
- NEP-CDM-2010-05-02 (Collective Decision-Making)
- NEP-MAC-2010-05-02 (Macroeconomics)
- NEP-MON-2010-05-02 (Monetary Economics)
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- Esteban Colla De Robertis & Last: Colla De Robertis, 2010. "Monetary policy committees and the decision to publish voting records," Documentos de InvestigaciÃ³n - Research Papers 1, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
- Timo Henckel & Shaun Vahey & Liz Wakerly, 2011. "Probabilistic Interest Rate Setting With A Shadow Board: A Description Of The Pilot Project," CAMA Working Papers 2011-27, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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