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Making Monetary Policy by Committee

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  • Alan S. Blinder

Abstract

This paper considers a number of design features of monetary policy committees (MPCs), including their size and composition, the degree of consensus for which they strive, the role of the committee chair, voting procedures, methods of appointment and communication techniques. Real-world MPCs vary substantially in all these respects and more. Based on the theoretical and empirical research to date, most of which is of very recent vintage, a tentative set of 'best practices' is proposed. Copyright 2009 Blackwell Publishing Ltd

Suggested Citation

  • Alan S. Blinder, 2009. "Making Monetary Policy by Committee," International Finance, Wiley Blackwell, vol. 12(2), pages 171-194, August.
  • Handle: RePEc:bla:intfin:v:12:y:2009:i:2:p:171-194
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    References listed on IDEAS

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    1. Lombardelli, Clare & James Proudman & James Talbot, 2003. "Committees versus individuals: an experimental analysis of monetary policy decision-making," Royal Economic Society Annual Conference 2003 142, Royal Economic Society.
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    10. Moutot, Philippe & Jung, Alexander & Mongelli, Francesco Paolo, 2008. "The working of the eurosystem: monetary policy preparations and decision-making - selected issues," Occasional Paper Series 79, European Central Bank.
    11. Waller, Christopher J., 1992. "A bargaining model of partisan appointments to the central bank," Journal of Monetary Economics, Elsevier, pages 411-428.
    12. 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.
    13. Céline Christensen & Peter Els & Maarten Rooij, 2006. "Dutch Households’ Perceptions of Economic Growth and Inflation," De Economist, Springer, vol. 154(2), pages 277-294, June.
    14. 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.
    15. Faust, Jon, 1996. "Whom can we trust to run the Fed? Theoretical support for the founders' views," Journal of Monetary Economics, Elsevier, pages 267-283.
    16. EllenE. Meade & David Stasavage, 2008. "Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve," Economic Journal, Royal Economic Society, vol. 118(528), pages 695-717, April.
    17. Chappell, Henry W, Jr & McGregor, Rob Roy & Vermilyea, Todd, 2004. "Majority Rule, Consensus Building, and the Power of the Chairman: Arthur Burns and the FOMC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 407-422, June.
    18. Erhart, Szilárd & Vasquez-Paz, Jose Luis, 2007. "Optimal monetary policy committee size: theory and cross country evidence," Kiel Advanced Studies Working Papers 439, Kiel Institute for the World Economy (IfW).
    19. Blinder, Alan S., 2007. "Monetary policy by committee: Why and how?," European Journal of Political Economy, Elsevier, pages 106-123.
    20. Christina D. Romer & David H. Romer, 2004. "Choosing the Federal Reserve Chair: Lessons from History," Journal of Economic Perspectives, American Economic Association, pages 129-162.
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    Citations

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    Cited by:

    1. Christian Pierdzioch & Jan-Christoph Rülke & Peter Tillmann, 2013. "Using forecasts to uncover the loss function of FOMC members," MAGKS Papers on Economics 201302, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Jung, Alexander & Latsos, Sophia, 2015. "Do federal reserve bank presidents have a regional bias?," European Journal of Political Economy, Elsevier, pages 173-183.
    3. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, pages 547-553.
    4. Muchlinski, Elke, 2010. "Metaphern, Begriffe und Bedeutungen: Das Beispiel internationale monetäre Institutionen," Discussion Papers 2010/14, Free University Berlin, School of Business & Economics.
    5. Yann Braouezec, 2010. "Committee, Expert Advice, and the Weighted Majority Algorithm: An Application to the Pricing Decision of a Monopolist," Computational Economics, Springer;Society for Computational Economics, vol. 35(3), pages 245-267, March.
    6. Smales, Lee A. & Apergis, Nick, 2016. "The influence of FOMC member characteristics on the monetary policy decision-making process," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 216-231.
    7. El-Shagi, Makram & Jung, Alexander, 2015. "Does the Greenspan era provide evidence on leadership in the FOMC?," Journal of Macroeconomics, Elsevier, pages 173-190.
    8. Granziera, Eleonora & Hubrich, Kirstin & Moon, Hyungsik Roger, 2014. "A predictability test for a small number of nested models," Journal of Econometrics, Elsevier, pages 174-185.
    9. Svensson, Lars E O, 2009. "Transparency under Flexible Inflation Targeting: Experiences and Challenges," CEPR Discussion Papers 7213, C.E.P.R. Discussion Papers.
    10. Petra Gerlach-Kristen & Ellen E. Meade, 2010. "Is There a Limit on FOMC Dissents? Evidence from the Greenspan Era," Working Papers 2010-16, American University, Department of Economics.
    11. Jung, Alexander & Latsos, Sophia, 2014. "Do federal reserve bank presidents have a regional bias?," Working Paper Series 1731, European Central Bank.
    12. El-Shagi, Makram & Jung, Alexander, 2015. "Does the Greenspan era provide evidence on leadership in the FOMC?," Journal of Macroeconomics, Elsevier, pages 173-190.
    13. Brada & Kubíček & Kutan & Tomšík, 2015. "Inflation Targeting: Insights from Behavioral Economics," Eastern European Economics, Taylor & Francis Journals, vol. 53(5), pages 357-376, September.
    14. Federico Favaretto & Donato Masciandaro, 2016. "Too Little, Too Late? Monetary Policymaking Inertia and Psychology: A Behavioral Model," BAFFI CAREFIN Working Papers 1617, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    15. Sylvester Eijffinger & Ronald Mahieu & Louis Raes, 2016. "Monetary Policy Committees, Voting Behavior and Ideal Points," BAFFI CAREFIN Working Papers 1628, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    16. repec:mes:eaeuec:v:53:y:2015:i:5:p:357-376 is not listed on IDEAS
    17. Johnson, Eric D. & Ellis, Michael A. & Kotenko, Diana, 2012. "Consensus building on the FOMC: An analysis of end of tenure policy preferences," Economics Letters, Elsevier, pages 368-371.
    18. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, pages 547-553.

    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • 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

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