Influence and Interactions in Monetary Policy Committees.. / Bhattacharjee, Arnab; Holly, Sean.
2012. 1-48 Paper presented at Money Macro and Finance Research Group 44th Annual Conference, Dublin, Ireland.Research output: Contribution to conference › Paper
}
TY - CONF
T1 - Influence and Interactions in Monetary Policy Committees.
A1 - Bhattacharjee,Arnab
A1 - Holly,Sean
AU - Bhattacharjee,Arnab
AU - Holly,Sean
PY - 2012/4/29
Y1 - 2012/4/29
N2 - Over the last two decades central bank independence has become<br/>the default for the conduct of monetary policy. In turn the decision-<br/>making process, within a central bank, has become - by design - much<br/>more transparent. The governance of this process is generally embed-<br/>ded in some type of committee. In turn, the use of committees to<br/>make decisions about interest rates, and other aspects of monetary<br/>policy, has increased the amount of information –again deliberately –<br/>made available about this decision-making itself. This in turn has gen-<br/>erated a large literature on how committees make decisions, how they<br/>interact among themselves, and whether or not the outcome re‡ects<br/>the consensus, a majority decision, or perhaps the domination of one<br/>or more members of the committee in the decision-making process.<br/>This paper o¤ers further insight into how decisions are made within a<br/>committee and and proposes a method by which we can detect hidden<br/>interactions among members of a committee, once we’ve conditioned<br/>on the factors that in‡uence individual committee member’s decisions<br/>on interest rates. Using our method we are able to identify directions<br/>of in‡uence. In other words, a committee member can in‡uence an-<br/>other committee member, but not necessarily be in‡uenced in return<br/>by that member. In other words, that can be considerable asymmetry<br/>in the in‡uence committee members have, and how they are in‡uenced<br/>in turn by others.
AB - Over the last two decades central bank independence has become<br/>the default for the conduct of monetary policy. In turn the decision-<br/>making process, within a central bank, has become - by design - much<br/>more transparent. The governance of this process is generally embed-<br/>ded in some type of committee. In turn, the use of committees to<br/>make decisions about interest rates, and other aspects of monetary<br/>policy, has increased the amount of information –again deliberately –<br/>made available about this decision-making itself. This in turn has gen-<br/>erated a large literature on how committees make decisions, how they<br/>interact among themselves, and whether or not the outcome re‡ects<br/>the consensus, a majority decision, or perhaps the domination of one<br/>or more members of the committee in the decision-making process.<br/>This paper o¤ers further insight into how decisions are made within a<br/>committee and and proposes a method by which we can detect hidden<br/>interactions among members of a committee, once we’ve conditioned<br/>on the factors that in‡uence individual committee member’s decisions<br/>on interest rates. Using our method we are able to identify directions<br/>of in‡uence. In other words, a committee member can in‡uence an-<br/>other committee member, but not necessarily be in‡uenced in return<br/>by that member. In other words, that can be considerable asymmetry<br/>in the in‡uence committee members have, and how they are in‡uenced<br/>in turn by others.
KW - committee decision making
KW - SOCIAL NETWORKS
KW - cross-section and spatial interaction
KW - Generalised method of moments
KW - Censored Regression Model
KW - Expectation-Maximisation Algorithm
KW - Monetary Policy Committee
UR - https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=MMF2012&paper_id=105
M1 - Paper
SP - 1
EP - 48
ER -