Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86280
Authors: 
Berk, Jan Marc
Bierut, Beata
Year of Publication: 
2004
Series/Report no.: 
Tinbergen Institute Discussion Paper 04-120/2
Abstract: 
Most monetary policy committees decide on interest rates using a simple majority voting rule. Given the inherent heterogeneity of committee members, this voting rule is suboptimal in terms of the quality of the interest rate decision, but popular for other (political) reasons. We show that a clustering of committee members into 2 subgroups, as is the case in a hub-and spokes systems of central banks such as the Fed or the ESCB, can eliminate this suboptimality whilst retaining the majority voting rule.
Subjects: 
central banks' policies
decision-making under uncertainty
committees
decision-making processes
JEL: 
D71
D78
E58
Document Type: 
Working Paper

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