The Dynamic (In)efficiency of Monetary Policy by Committee
Alessandro Riboni and
Francisco Ruge-Murcia
No 206, 2006 Meeting Papers from Society for Economic Dynamics
Abstract:
This paper develops a model where the value of the monetary policy instrument is selected by a heterogenous committee engaged in a dynamic voting game. Committee members differ in their institutional power and, in certain states of nature, they also differ in their preferred instrument value. Preference heterogeneity and concern for the future interact to generate decisions that are dynamically inefficient and inertial around the previously-agreed instrument value. This model endogenously generates autocorrelation in the policy variable and provides an explanation for the empirical observation that the nominal interest rate under the central bank's control is infrequently adjusted
Keywords: Committees; status-quo bias; interest-rate smoothing; dynamic voting (search for similar items in EconPapers)
JEL-codes: D02 E58 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-cdm, nep-mac, nep-mon and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)
Downloads: (external link)
https://www.red-files-public.s3.amazonaws.com/meetpapers/2006/paper_206.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
Related works:
Journal Article: The Dynamic (In)Efficiency of Monetary Policy by Committee (2008)
Working Paper: The Dynamic (In)efficiency of Monetary Policy by Committee (2006) 
Working Paper: The Dynamic (In)efficiency of Monetary Policy by Committee (2006) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:red:sed006:206
Access Statistics for this paper
More papers in 2006 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().