Influence and Interactions in Monetary Policy Committees

    Research output: Chapter in Book/Report/Conference proceedingConference contribution

    Abstract

    Over the last two decades central bank independence has become
    the default for the conduct of monetary policy. In turn the decision-
    making process, within a central bank, has become - by design - much
    more transparent. The governance of this process is generally embed-
    ded in some type of committee. In turn, the use of committees to
    make decisions about interest rates, and other aspects of monetary
    policy, has increased the amount of information –again deliberately –
    made available about this decision-making itself. This in turn has gen-
    erated a large literature on how committees make decisions, how they
    interact among themselves, and whether or not the outcome reflects
    the consensus, a majority decision, or perhaps the domination of one
    or more members of the committee in the decision-making process.
    This paper offers further insight into how decisions are made within a
    committee and and proposes a method by which we can detect hidden
    interactions among members of a committee, once we’ve conditioned
    on the factors that influence individual committee member’s decisions
    on interest rates. Using our method we are able to identify directions
    of influence. In other words, a committee member can influence an-
    other committee member, but not necessarily be influenced in return
    by that member. In other words, that can be considerable asymmetry
    in the influence committee members have, and how they are influenced
    in turn by others.
    Original languageEnglish
    Title of host publicationMoney Macro and Finance Research Group 44th Annual Conference
    Pages1-48
    Number of pages48
    Publication statusPublished - Apr 2012
    EventMoney Macro and Finance Research Group 44th Annual Conference - Dublin, Ireland
    Duration: 6 Sep 20128 Sep 2012

    Conference

    ConferenceMoney Macro and Finance Research Group 44th Annual Conference
    CountryIreland
    CityDublin
    Period6/09/128/09/12

    Keywords

    • committee decision making
    • social networks
    • cross-section and spatial interaction
    • generalised method of moments
    • censored regression model expectation-maximisation algorithm
    • Monetary Policy Committee

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