On the Design of Monetary Policy Committees
AbstractAs the opening speaker, I may perhaps be permitted a short trip down memory lane. The trip is purposeful, and it will be mercifully short. While preparing my Marshall Lectures for delivery at Cambridge in 1995, I asked the Federal Reserve staff, for I was then Vice Chairman, to research what had been written about monetary policymaking by committees—as opposed to by individuals. Although they were (and remain) a knowledgeable and thorough bunch, they unearthed almost nothing. So when I subsequently delivered the Robbins Lectures at the London School of Economics the following year, this is what I concluded on the subject: My own hunch is that, on balance, the additional monetary policy inertia imparted by group decisionmaking provides a net benefit to society. But my main point is simpler: My experience as a member of the FOMC left me with a strong feeling that the theoretical fiction that monetary policy is made by a single individual maximizing a well-defined preference function misses something important. In my view, monetary theorists should start paying some attention to the nature of decisionmaking by committee, which is rarely mentioned in the academic literature. (Blinder, 1998, p. 22)
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1030.
Date of creation: Sep 2007
Date of revision:
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Waller, Christopher J., 1992. "A bargaining model of partisan appointments to the central bank," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 411-428, June.
- Szilárd Erhart & Jose-Luis Vasquez-Paz, 2007.
"Optimal monetary policy committee size: Theory and cross country evidence,"
MNB Working Papers
2007/6, Magyar Nemzeti Bank (the central bank of Hungary).
- Szilárd Erhart & Jose Luis Vasquez-Paz, 2007. "Optimal Monetary Policy Committee Size: Theory and Cross Country Evidence," Kiel Advanced Studies Working Papers 439, Kiel Institute for the World Economy.
- Anne Sibert, 2006.
"Central Banking by Committee,"
Wiley Blackwell, vol. 9(2), pages 145-168, 08.
- Clare Lombardelli & James Proudman & James Talbot, 2005. "Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision-Making," International Journal of Central Banking, International Journal of Central Banking, vol. 1(1), May.
- Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, vol. 82(1), pages 273-86, March.
- Faust, Jon, 1996. "Whom can we trust to run the Fed? Theoretical support for the founders' views," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 267-283, April.
- Alan Blinder, 2006.
"Monetary Policy by Committee: Why and How?,"
DNB Working Papers
092, Netherlands Central Bank, Research Department.
- Berger, Helge & Nitsch, Volker, 2008.
"Too many cooks? Committees in monetary policy,"
2008/8, Free University Berlin, School of Business & Economics.
- Christian Aubin & Ibrahima Diouf & Dominique Pepin, 2010. "Inertie De La Politique Monétaire Dans La Zone Euro : Le Rôle De L'Hétérogénéité," Post-Print hal-00960030, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Long).
If references are entirely missing, you can add them using this form.