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The Effects of Learning in Interactive Monetary Policy Committees

Author

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  • Jan Marc Berk

    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam, and De Nederlandsche Bank, Amsterdam)

  • Beata K. Bierut

    (Faculty of Economics, Erasmus Universiteit Rotterdam, and De Nederlandsche Bank, Amsterdam)

Abstract

We develop a theoretical framework for studying the effects of interaction on the quaJity of decision-making by monetary policy committees. We show that interaction, i.e. increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting behaviour.Therefore, and in contrast to earlier literature, we find that interaction is beneficial for the collective outcome.

Suggested Citation

  • Jan Marc Berk & Beata K. Bierut, 2004. "The Effects of Learning in Interactive Monetary Policy Committees," Tinbergen Institute Discussion Papers 04-029/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040029
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    References listed on IDEAS

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    1. 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.
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    4. Carsten Hefeker, 2003. "Federal Monetary Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 643-659, December.
    5. Alan S. Blinder & John Morgan, 2000. "Are Two Heads Better than One?: An Experimental Analysis of Group vs. Individual Decisionmaking," Working Papers 2000-1, Princeton University. Economics Department..
    6. 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.
    7. Berk, J.M. & Bierut, B.K., 2003. "Committee structure and its implications for monetary policy decision-making," Serie Research Memoranda 0006, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    8. Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
    9. Jan Marc Berk & Beata K. Bierut, 2003. "Committee Structure and its Implications for Monetary Policy Decision-making," Tinbergen Institute Discussion Papers 03-053/2, Tinbergen Institute.
    10. Anne Sibert, 2003. "Monetary Policy Committees: Individual and Collective Reputations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(3), pages 649-665.
    11. Marvin Goodfriend, 1999. "The role of a regional bank in a system of central banks. 1999 annual report of the Federal Reserve Bank of Richmond," Annual Report, Federal Reserve Bank of Richmond.
    12. Austen-Smith, David & Banks, Jeffrey S., 1996. "Information Aggregation, Rationality, and the Condorcet Jury Theorem," American Political Science Review, Cambridge University Press, vol. 90(1), pages 34-45, March.
    13. Gradstein, Mark & Nitzan, Shmuel & Paroush, Jacob, 1990. "Collective Decision Making and the Limits on the Organization's Size," Public Choice, Springer, vol. 66(3), pages 279-291, September.
    14. Gildea, John A, 1992. "The Regional Representation of Federal Reserve Bank Presidents," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 215-225, May.
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    Cited by:

    1. Helge Berger & Volker Nitsch, 2011. "Too Many Cooks? Committees in Monetary Policy," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 452-475, October.
    2. Berger, Helge & Nitsch, Volker & Lybek, Tonny, 2008. "Central bank boards around the world: Why does membership size differ?," European Journal of Political Economy, Elsevier, vol. 24(4), pages 817-832, December.
    3. Helge Berger, 2006. "Optimal central bank design: Benchmarks for the ECB," The Review of International Organizations, Springer, vol. 1(3), pages 207-235, September.

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    More about this item

    Keywords

    Monetary policy; interest rates; learning;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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