How committees impact the volatility of policy rates
AbstractThis paper relates the volatility of interest rates to the collective nature of monetary policymaking in monetary unions. Several decision rules are modelled, including hegemonic and democratic procedures, and also committees headed by a chairman. A ranking of decision rules in terms of the volatility of policy rates is obtained, showing that the presence of a chairman has a cooling effect. However, members of a monetary union are better off under symmetric rules (voting, averaging, bargaining), unless they themselves chair the union. The results are robust to the inclusion of heterogeneities among members of the monetary union.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/13608.
Date of creation: Dec 2009
Date of revision:
Publication status: Published in: Journal of Macroeconomics (2009)
Monetary policy committees; Decision procedures; Interest-rate; M;
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- Bernd Hayo & Pierre-Guillaume Méon, 2013.
"Behind closed doors: Revealing the ECB’s Decision Rule,"
Working Papers CEB
13-025, ULB -- Universite Libre de Bruxelles.
- Hayo, Bernd & Méon, Pierre-Guillaume, 2013. "Behind closed doors: Revealing the ECB's decision rule," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 135-160.
- Bernd Hayo & Pierre-Guillaume Méon, 2011. "Behind closed doors: Revealing the ECB’s Decision Rule," MAGKS Papers on Economics 201135, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Bernd Hayo & Pierre-Guillaume Méon, 2013. "Behind closed doors: Revealing the ECB’s decision rule," ULB Institutional Repository 2013/163529, ULB -- Universite Libre de Bruxelles.
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