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The Central Bank Governor and Interest Rate Setting by Committee

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  • Emile van Ommeren
  • Giulia Piccillo

Abstract

This paper examines the role of central bank governors in monetary policy decisions taken by a committee. To carry out this analysis, we constructed a novel dataset of committee voting behaviour for six OECD countries for up to three decades. Using a range of Taylor-rule specifications, we show that a change in governor significantly affects the interest rate setting of the whole committee. We also observe systematic differences in the responsiveness to recent changes in the state of the economy based on the political party appointing the governor, with higher responsiveness under governors that are appointed by a left-wing political authority. In contrast, right wing appointed governors are more likely to consider expected economic developments in the future when deciding on the appropriate interest rate.

Suggested Citation

  • Emile van Ommeren & Giulia Piccillo, 2019. "The Central Bank Governor and Interest Rate Setting by Committee," CESifo Working Paper Series 7822, CESifo.
  • Handle: RePEc:ces:ceswps:_7822
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    More about this item

    Keywords

    monetary policy; Taylor rule; central bank governors;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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