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Dissent in Monetary Policy Decisions

  • Alessandro Riboni

    (Department of Economics, University of Montreal)

  • Francisco J. Ruge-Murcia

    (Department of Economics, University of Montreal and Rimini Centre for Economic Analysis (RCEA))

Voting records indicate that dissents in monetary policy committees are frequent and predictability regressions show that they help forecast future policy decisions. In order to study whether the latter relation is causal, we construct a model of committee decision making and dissent where members' decisions are not a function of past dissents. The model is estimated using voting data from the Bank of England and the Riksbank. Stochastic simulations show that the decision-making frictions in our model help account for the predictive power of current dissents. The effect of institutional characteristics and structural parameters on dissent rates is examined using simulations as well.

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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 27_11.

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Date of creation: May 2011
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Handle: RePEc:rim:rimwps:27_11
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