Designing Monetary Policy Committees

Konferenzbeitrag

We integrate monetary policy-making by committee into a New Keynesian model to assess the consequences of the committee's institutional characteristics for inflation, output, and welfare. Our analysis delivers the following results. First, we demonstrate that transparency about the committee's future composition may be harmful. Second, we show that longer terms for central bankers lead to more effective output stabilization at the expense of higher inflation variability. Third, larger committees allow for more efficient stabilization of inflation but for less efficient output stabilization. Fourth, large committees and short terms are therefore socially desirable if the weight on output stabilization in the social loss function is low. Fifth, we show that a central banker with random preferences may be preferable to a central banker who shares the preferences of society.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Monetary policy ; No. A04-V4

Classification and Topics

• Classification: Wirtschaft ; Central Banks and Their Policies ; Social Choice; Clubs; Committees; Associations ; Monetary Policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hahn, Volker
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/112811
• Last update: 10.03.2025, 11:43 AM CET