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Monetary policy deliberations: committee size and voting rules

  • Maurin, Vincent
  • Vidal, Jean-Pierre
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    How large should a monetary policy committee be? Which voting rule should a monetary policy committee adopt? This paper builds on Condorcet's jury threorem to analyse the relationships between committee size and voting rules in a model where policy discussions are subject to a time constraint. It suggests that in large committees majority voting is likely to enhance policy outcomes. Under unanimity (consensus) it is preferable to limit the size of the committee. Finally, supermajority voting rules are social contrivances that contribute to policy performance in a more uncertain environment, when initial policy proposals are less likely to be correct, or when payoffs are asymmetric. JEL Classification: D71, D78, D81, E58

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    Paper provided by European Central Bank in its series Working Paper Series with number 1434.

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    Date of creation: May 2012
    Date of revision:
    Handle: RePEc:ecb:ecbwps:20121434
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    1. Arnab Bhattacharjee & Sean Holly, 2013. "Understanding Interactions in Social Networks and Committees," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(1), pages 23-53, March.
    2. Kirman, Alan, 1993. "Ants, Rationality, and Recruitment," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 137-56, February.
    3. Gerlach-Kristen, Petra, 2005. "Too little, too late: Interest rate setting and the costs of consensus," Economics Letters, Elsevier, vol. 88(3), pages 376-381, September.
    4. Jan Marc Berk & Beata K. Bierut, 2003. "Committee structure and its implications for Monetary policy decision-making," MEB Series (discontinued) 2003-05, Netherlands Central Bank, Monetary and Economic Policy Department.
    5. Petra Gerlach-Kristen, 2008. "The Role of the Chairman in Setting Monetary Policy: Individualistic vs. Autocratically Collegial MPCs," International Journal of Central Banking, International Journal of Central Banking, vol. 4(3), pages 119-143, September.
    6. Farvaque, Etienne & Matsueda, Norimichi & Méon, Pierre-Guillaume, 2009. "How monetary policy committees impact the volatility of policy rates," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 534-546, December.
    7. RIBONI, Alessandro & RUGE-MURCIA, Francisco J., 2007. "Preference Heterogeneity in Monetary Policy Committees," Cahiers de recherche 05-2007, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    8. Timothy Besley & Neil Meads & Paolo Surico, 2008. "Insiders versus outsiders in monetary policymaking," LSE Research Online Documents on Economics 33743, London School of Economics and Political Science, LSE Library.
    9. Alan Blinder, 2006. "Monetary Policy by Committee: Why and How?," DNB Working Papers 092, Netherlands Central Bank, Research Department.
    10. Stephen Hansen & Michael McMahon, 2011. "How Experts Decide: Identifying Preferences versus Signals from Policy Decisions," CEP Discussion Papers dp1063, Centre for Economic Performance, LSE.
    11. Keiichi Morimoto, 2010. "Coordination Behavior and Optimal Committee Size," Discussion Papers in Economics and Business 10-02, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    12. 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.
    13. Carl Andreas Claussen & Øistein Røisland, 2014. "The Discursive Dilemma in Monetary Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 702-733, 07.
    14. Bauke Visser & Otto H Swank, 2007. "On Committees of Experts," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 337-372, 02.
    15. Berk, Jan Marc & Bierut, Beata K., 2011. "Communication in a monetary policy committee," European Journal of Political Economy, Elsevier, vol. 27(4), pages 791-801.
    16. Jan Marc Berk & Beata K. Bierut, 2005. "Communication in Monetary Policy Committees," DNB Working Papers 059, Netherlands Central Bank, Research Department.
    17. Gerardi, Dino & Yariv, Leeat, 2007. "Deliberative voting," Journal of Economic Theory, Elsevier, vol. 134(1), pages 317-338, May.
    18. Christopher Spencer, 2005. "Consensus Formation in Monetary Policy Committees," School of Economics Discussion Papers 1505, School of Economics, University of Surrey.
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