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.
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 |
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School: | Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School |
Depositing User: | Administrator |
Date Deposited: | 15 Aug 2013 09:41 |
Last Modified: | 02 Aug 2023 17:06 |
URI: | https://eprints.bbk.ac.uk/id/eprint/8010 |
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