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    Credibility and flexibility with independent monetary policy committees

    Mihov, I. and Sibert, Anne (2006) Credibility and flexibility with independent monetary policy committees. Journal of Money, Credit, and Banking 38 (1), pp. 23-46. ISSN 1538-4616.

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    Abstract

    Independent monetary policy committees are a simple way of attaining relatively low inflation without completely sacrificing an activist role for monetary policy. If central bankers' types are unknown, then for a wide range of parameters an independent committee achieves higher social welfare than either a zero-inflation rule or discretionary policy conducted by an opportunistic central banker. A key reason for the committee's superior performance is that committee members are relatively likely to opt for low inflation and building a reputation when shocks are small. When large shocks hit the economy, the incentive to react outweighs the reputationbuilding benefit.

    Metadata

    Item Type: Article
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 15 Aug 2013 09:41
    Last Modified: 15 Aug 2013 09:41
    URI: https://eprints.bbk.ac.uk/id/eprint/8010

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