IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Consensus Formation in Monetary Policy Committees

  • Christopher Spencer

    (University of Surrey)

Building on Blinder and Wyplosz (2005) this paper presents a formal mechanism which potentially explains how autocratically collegiate, genuinely collegiate and individualistic monetary policy committees (MPCs) are able to reach a consensus. Drawing on the theory of Markov chains, I adopt a bounded-rational approach, and demonstrate how individuals are able to forge agreement, even when interest rate preferences are initially diverse. I show how consensus is reached when (i) career concerns are present and (ii) when members hold different opinions about the usefulness of others’ information. An overriding conclusion which emerges is that it is possible to populate MPCs with people who hold very different views about the economy and still reach an agreement. Further, although MPCs should be populated by people who are willing to listen to the opinions of others, the degree to which members are willing to listen to each other has ramifications for the type of decision which is reached.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.fahs.surrey.ac.uk/economics/discussion_papers/2005/DP15-05.pdf
Download Restriction: no

Paper provided by School of Economics, University of Surrey in its series School of Economics Discussion Papers with number 1505.

as
in new window

Length: 39 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:sur:surrec:1505
Contact details of provider: Postal: Guildford, Surrey GU2 5XH
Phone: (01483) 259380
Fax: (01483) 259548
Web page: http://www.surrey.ac.uk/economics/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Chappell, Henry W, Jr & McGregor, Rob Roy & Vermilyea, Todd, 2004. "Majority Rule, Consensus Building, and the Power of the Chairman: Arthur Burns and the FOMC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 407-22, June.
  2. Robert Aebi & Klaus Neusser & Peter Steiner, 2002. "A Large Deviation Approach to the Measurement of Mobility," Diskussionsschriften dp0220, Universitaet Bern, Departement Volkswirtschaft.
  3. Peter M. deMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2000. "A Model of Persuasion - With Implications for Financial Markets," Econometric Society World Congress 2000 Contributed Papers 1635, Econometric Society.
  4. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion bias, social influence, and uni-dimensional opinions," LSE Research Online Documents on Economics 454, London School of Economics and Political Science, LSE Library.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sur:surrec:1505. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alex Mandilaras)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.