Influence and Interactions in Monetary Policy Committees.

Arnab Bhattacharjee, Sean Holly

    Research output: Contribution to conferencePaper


    Over the last two decades central bank independence has become
    the default for the conduct of monetary policy. In turn the decision-
    making process, within a central bank, has become - by design - much
    more transparent. The governance of this process is generally embed-
    ded in some type of committee. In turn, the use of committees to
    make decisions about interest rates, and other aspects of monetary
    policy, has increased the amount of information –again deliberately –
    made available about this decision-making itself. This in turn has gen-
    erated a large literature on how committees make decisions, how they
    interact among themselves, and whether or not the outcome re‡ects
    the consensus, a majority decision, or perhaps the domination of one
    or more members of the committee in the decision-making process.
    This paper o¤ers further insight into how decisions are made within a
    committee and and proposes a method by which we can detect hidden
    interactions among members of a committee, once we’ve conditioned
    on the factors that in‡uence individual committee member’s decisions
    on interest rates. Using our method we are able to identify directions
    of in‡uence. In other words, a committee member can in‡uence an-
    other committee member, but not necessarily be in‡uenced in return
    by that member. In other words, that can be considerable asymmetry
    in the in‡uence committee members have, and how they are in‡uenced
    in turn by others.
    Original languageEnglish
    Number of pages48
    Publication statusPublished - 29 Apr 2012
    Event44th Annual Money Macro and Finance Conference - Trinity College, Dublin, Ireland
    Duration: 6 Sept 20128 Sept 2012


    Conference44th Annual Money Macro and Finance Conference
    Abbreviated titleMMF 2012
    Internet address


    • committee decision making
    • cross-section and spatial interaction
    • Generalised method of moments
    • Censored Regression Model
    • Expectation-Maximisation Algorithm
    • Monetary Policy Committee


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