On the Design of Monetary Policy Committees
As the opening speaker, I may perhaps be permitted a short trip down memory lane. The trip is purposeful, and it will be mercifully short. While preparing my Marshall Lectures for delivery at Cambridge in 1995, I asked the Federal Reserve staff, for I was then Vice Chairman, to research what had been written about monetary policymaking by committees—as opposed to by individuals. Although they were (and remain) a knowledgeable and thorough bunch, they unearthed almost nothing. So when I subsequently delivered the Robbins Lectures at the London School of Economics the following year, this is what I concluded on the subject: My own hunch is that, on balance, the additional monetary policy inertia imparted by group decisionmaking provides a net benefit to society. But my main point is simpler: My experience as a member of the FOMC left me with a strong feeling that the theoretical fiction that monetary policy is made by a single individual maximizing a well-defined preference function misses something important. In my view, monetary theorists should start paying some attention to the nature of decisionmaking by committee, which is rarely mentioned in the academic literature. (Blinder, 1998, p. 22)
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"Central Banking by Committee,"
Wiley Blackwell, vol. 9(2), pages 145-168, 08.
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- Clare Lombardelli & James Proudman & James Talbot, 2002. "Committees versus individuals: an experimental analysis of monetary policy decision-making," Bank of England working papers 165, Bank of England.
- Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, vol. 82(1), pages 273-86, March.
- Faust, Jon, 1996. "Whom can we trust to run the Fed? Theoretical support for the founders' views," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 267-283, April.
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