How committees impact the volatility of policy rates

Pierre-Guillaume Méon, Etienne Farvaque and Norimichi Matsueda

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This paper relates the volatility of interest rates to the collective nature of monetary policymaking in monetary unions. Several decision rules are modelled, including hegemonic and democratic procedures, and also committees headed by a chairman. A ranking of decision rules in terms of the volatility of policy rates is obtained, showing that the presence of a chairman has a cooling effect. However, members of a monetary union are better off under symmetric rules (voting, averaging, bargaining), unless they themselves chair the union. The results are robust to the inclusion of heterogeneities among members of the monetary union.

Keywords: Monetary policy committees; Decision procedures; Interest-rate; M (search for similar items in EconPapers)
Date: 2009-12
Note: SCOPUS: ar.j
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Citations: View citations in EconPapers (18)

Published in: Journal of Macroeconomics (2009)

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Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/13608

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