 Interest rate setting at the ECB: Individual preferences and collective decision makingJosé Ramón Cancelo, Diego Varela Pedreira () and José Manuel Sánchez-Santos Journal of Policy Modeling, 2011, vol. 33, issue 6, pages 804-820 Abstract: We investigate whether the members of the Governing Council of the European Central Bank take into account the specific economic conditions of their states of origin, to set the interest rates for the euro area. Testing the national-based view against the Europeanist perspective is a challenging issue, because voting inside the Governing Council is secret, and the final outcome depends both on the individual preferences and the procedures followed by the Governing Council to arrive at a decision. Accordingly, we model interest rate setting as a two-stage process: first, each member of the Governing Council sets his/her preferred rate, and next the Governing Council meets and decides the actual figure. Our empirical analysis shows that domestic developments play a major role in determining the preferred interest rate of the each member; and that some members exert agenda setting power, that precludes some interest rate policies to be considered at the meeting. Keywords: European Central Bank; Monetary policy; Policy reaction function; Committees; Nationalistic bias; Voting models; Agenda setting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:eee:jpolmo:v:33:y:2011:i:6:p:804-820 Access Statistics for this article Journal of Policy Modeling is edited by A. M. Costa More articles in Journal of Policy Modeling from Elsevier |
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