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Voting by monetary policy committees: evidence from the CEE inflation-targeting countries

Author

Listed:
  • Alexander Jung

    () (European Central Bank)

  • Gergely Kiss

    () (Fitch Ratings)

Abstract

The aim of this paper is to study preference heterogeneity in monetary policy committees of inflation-targeting (IT) countries in Central and Eastern Europe (CEE) during the period 2005–2010. It employs (individual) voting records of the Monetary Council of the Magyar Nemzeti Bank (the central bank of Hungary) and of the Monetary Policy Council of the National Bank of Poland. Preference heterogeneity in committees is not directly observable. Therefore, we pursue an indirect measurement and conduct an econometric analysis based on (pooled) Taylor-type reaction functions estimated using real-time information on economic and financial indicators and voting records. Recent evidence for the monetary policy committees (MPCs) of advanced economies (see Besley et al., 2008; Jung, 2011) suggests that preference heterogeneity among its members is systematic. Unlike for monetary policy committees of advanced countries, the present paper finds preference heterogeneity to be random for both the members of the Monetary Policy Council of the National Bank of Poland (NBP), and the members of the Monetary Council of the Magyar Nemzeti Bank (MNB). But, similar to the committees of advanced economies, the diversity of views on the inflation forecast is measurable in both committees. A separate cluster analysis shows that different preferences of MPC members may be attributable to their status (chairman, internal member, external member) and that members may also differ in their desired response to changes in the economic outlook.

Suggested Citation

  • Alexander Jung & Gergely Kiss, 2012. "Voting by monetary policy committees: evidence from the CEE inflation-targeting countries," MNB Working Papers 2012/2, Magyar Nemzeti Bank (Central Bank of Hungary).
    • Handle: RePEc:mnb:wpaper:2012/2
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    File URL: http://www.mnb.hu/letoltes/wp-2012-02.pdf
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    References listed on IDEAS

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    1. Timothy Besley & Neil Meads & Paolo Surico, 2008. "Insiders versus Outsiders in Monetary Policymaking," American Economic Review, American Economic Association, vol. 98(2), pages 218-223, May.
    2. Christopher Spencer, 2006. "Reaction Functions of Bank of England MPC Members: Insiders versus Outsiders," School of Economics Discussion Papers 0606, School of Economics, University of Surrey.
    3. Geoffrey M. B. Tootell, 1991. "Are district presidents more conservative than board governors?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-12.
    4. Sirchenko, Andrei, 2010. "Policymakers' Votes and Predictability of Monetary Policy," University of California at San Diego, Economics Working Paper Series qt8qj3z3qg, Department of Economics, UC San Diego.
    5. Alessandro Riboni & Francisco J. Ruge-Murcia, 2008. "Preference Heterogeneity in Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 213-233, March.
    6. 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.
    7. Lamarche Jean-Francois & Koustasy Zisimos, 2012. "Estimation of a Nonlinear Taylor Rule Using Real-Time U.S. Data," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(5), pages 1-26, December.
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    9. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-677, August.
    10. Sibert, Anne, 2002. "Monetary policy with uncertain central bank preferences," European Economic Review, Elsevier, vol. 46(6), pages 1093-1109, June.
    11. Owyang, Michael T. & Ramey, Garey, 2004. "Regime switching and monetary policy measurement," Journal of Monetary Economics, Elsevier, vol. 51(8), pages 1577-1597, November.
    12. Jacek Kotlowski, 2005. "Reaction functions of the Polish central bankers. A logit approach," Working Papers 18, Department of Applied Econometrics, Warsaw School of Economics.
    13. Michael W. McCracken, 2010. "Disagreement at the FOMC: the dissenting votes are just part of the story," The Regional Economist, Federal Reserve Bank of St. Louis, issue Oct, pages 10-16.
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    16. Lin, Shu & Ye, Haichun, 2009. "Does inflation targeting make a difference in developing countries?," Journal of Development Economics, Elsevier, vol. 89(1), pages 118-123, May.
    17. Ellen E. Meade, 2005. "The FOMC: preferences, voting, and consensus," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 93-101.
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    Citations

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    Cited by:

    1. Tim Aldridge & Amy Wood, 2014. "Monetary policy decision-making and accountability structures: some cross-country comparisons," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-30, March.
    2. Donato Masciandaro & Paola Profeta & Davide Romelli, 2016. "Gender and Monetary Policymaking: Trends and Drivers," BAFFI CAREFIN Working Papers 1512, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    3. Ekor, Maxwell & Saka, Jimoh & Adeniyi, Oluwatosin, 2014. "Monetary Policy Committee and Monetary Policy Conduct in Nigeria: A Preliminary Investigation," MPRA Paper 60770, University Library of Munich, Germany, revised 2014.
    4. repec:ces:ifodic:v:10:y:2012:i:1:p:18174973 is not listed on IDEAS
    5. Favaretto, Federico & Masciandaro, Donato, 2016. "Doves, hawks and pigeons: Behavioral monetary policy and interest rate inertia," Journal of Financial Stability, Elsevier, vol. 27(C), pages 50-58.
    6. Jürgen Stark & Alexander Jung & Francesco Paolo Mongelli, 2012. "Normal Times versus Crisis Times," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 10(1), pages 03-09, 04.

    More about this item

    Keywords

    central banking; monetary policy committee; inflation targeting; collective decision-making; voting; preferences; pooled regressions;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • 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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