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    Central banking by committee

    Sibert, Anne (2006) Central banking by committee. International Finance 9 (2), pp. 145-168. ISSN 1367-0271.

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    Abstract

    A small economics literature on monetary policy making by committee is complemented by the literature on groups in the other social sciences. I review some of this work, focusing on the effect of size on group performance and whether committees are more moderate than individuals. Studies document that an individual's effort decreases with group size unless their contributions can be identified and evaluated and that committee membership is polarizing, tending to make committees more extreme. A particularly harmful form of group polarization occurs when a striving for consensus causes members to stop paying sufficient attention to alternative actions. The literature suggests that monetary policy committees should have a clear objective, publish individual votes and not have many more than five members. They should be structured so that members do not act as part of a group, perhaps by having short terms in office and members from outside the central bank. External scrutiny of the decision-making process should be encouraged.

    Metadata

    Item Type: Article
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 15 Aug 2013 09:28
    Last Modified: 15 Aug 2013 09:28
    URI: https://eprints.bbk.ac.uk/id/eprint/8009

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