Communication in a monetary policy committee

Jan Marc Berk and Beata K. Bierut

European Journal of Political Economy, 2011, vol. 27, issue 4, 791-801

Abstract: We model monetary policy decisions as being taken by a group of heterogeneous policy makers, organized in a committee. Intuitively, when MPC members disclose and discuss the arguments behind their view on the interest rate, the quality of the collective decision should be higher compared to merely taking a simultaneous vote. We show that in some cases this intuition need not be correct. We also find that communication is a relatively effective way to implement the ‘knowledge pooling’ argument in favor of collective decision-making, compared to expanding the size of a committee. Moreover, decision-making with internal communication appears generally more robust in situations when heterogeneity of members is not adequately captured by decision-making rules.

Keywords: Committees; Deliberations; Correlated votes; Simple majority voting (search for similar items in EconPapers)
JEL-codes: D71 D78 E58 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:27:y:2011:i:4:p:791-801

DOI: 10.1016/j.ejpoleco.2011.05.001

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