Central Banks’ Voting Records and Future Policy

Roman Horvath, Katerina Smidkova and Jan Zapal

No 2011/37, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We assess whether the voting records of central bank boards are informative about future monetary policy. First, we specify a theoretical model of central bank board decision-making and simulate the voting outcomes. Three different versions of model are estimated with simulated data: 1) democratic, 2) consensual and 3) opportunistic. These versions differ in the degree of informational influence between the chairman and other board members influence prior to the voting. The model shows that the voting pattern is informative about future monetary policy provided that the signals about the optimal policy rate are noisy and that there is sufficient independence in voting across the board members, which is in line with the democratic version. Next, the model predictions are tested on real data on five inflation targeting countries (the Czech Republic, Hungary, Poland, Sweden and the United Kingdom). Subject to various sensitivity tests, it is found that the democratic version of the model corresponds best to the real data and that in all countries the voting records are informative about future monetary policy, making a case for publishing the records.

Keywords: monetary policy; voting record; transparency; collective decision-making. (search for similar items in EconPapers)
JEL-codes: C78 D78 E52 E58 (search for similar items in EconPapers)
Pages: 55
Date: 2011-12, Revised 2011-12
New Economics Papers: this item is included in nep-cba, nep-cdm, nep-gth, nep-mon, nep-pol and nep-tra
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Related works:
Journal Article: Central Banks' Voting Records and Future Policy (2012)
Working Paper: Central Banks' Voting Records and Future Policy (2012)
Working Paper: Central Banks' Voting Records and Future Policy (2010)
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