Credibility and Flexibility with Monetary Policy Committees

Mihov, Ilian; Sibert, Anne

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Credibility and Flexibility with Monetary Policy Committees

31 Pages Posted: 23 Apr 2002

See all articles by Ilian Mihov

Ilian Mihov

INSEAD; Centre for Economic Policy Research (CEPR)

Anne Sibert

Birkbeck, University of London; Centre for Economic Policy Research (CEPR)

There are 2 versions of this paper

Date Written: March 2002

Abstract

We consider independent monetary policy committees as a simple way of attaining relatively low inflation without completely sacrificing the stabilization role of monetary policy. If central banker's types are unknown, then for a wide range of parameters an independent monetary policy committee is better than either a mandated zero-inflation rule or discretionary policy conducted by an opportunistic central banker.

Keywords: Monetary policy committee, reputation, output stabilization, inflationary bias

JEL Classification: E42, E52, E58

Suggested Citation: Suggested Citation

Mihov, Ilian and Sibert, Anne, Credibility and Flexibility with Monetary Policy Committees (March 2002). Available at SSRN: https://ssrn.com/abstract=308042