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Central bankers in government appointed committees

  • Eslava, Marcela

I study the policy choices of members of a central bank committee, who are appointed by the government. Central bankers balance their desire to protect the Central Bank's reputation against their interest to be reappointed. Committees can be more successful than single central bankers at reducing inflation and insulating policy from government pressures. These gains are only achieved if the turnover rate of committee members is low and the committee is small. The former is associated with a low risk of being replaced for not supporting the government's preferred policy. The latter, meanwhile, implies high probability that a single vote affects policy, making any individual member more weary of potentially affecting the Central Bank's reputation through his vote.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 5-6 (June)
Pages: 363-379

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Handle: RePEc:eee:pubeco:v:94:y:2010:i:5-6:p:363-379
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  4. Mihov, Ilian & Sibert, Anne, 2006. "Credibility and Flexibility with Independent Monetary Policy Committees," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(1), pages 23-46, February.
  5. Waller, Christopher J, 1989. "Monetary Policy Games and Central Bank Politics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 422-31, November.
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  7. Eslava, Marcela, 2010. "Central bankers in government appointed committees," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 363-379, June.
  8. Fratianni, Michele & von Hagen, Jurgen & Waller, Christopher J, 1997. "Central Banking as a Political Principal-Agent Problem," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 378-93, April.
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  18. James B. Bullard & Christopher J. Waller, 2002. "Central bank design in general equilibrium," Working Papers 1998-002, Federal Reserve Bank of St. Louis.
  19. Barro, Robert J., 1986. "Reputation in a model of monetary policy with incomplete information," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 3-20, January.
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