Central Banking by Committee

22 Pages Posted: 18 Jul 2006

See all articles by Anne Sibert

Anne Sibert

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

Date Written: April 2006

Abstract

There is a small, but growing, economics literature on the importance and effects of having monetary policy made by a committee, rather than by an individual. Complimenting this is an older and larger body of literature on groups in the other social sciences, particular in social psychology. This paper provides a review of some of this work, focussing on two important features of committees: the effect of their size on performance and whether or not they are more moderate than the members who make them up. The results of the literature on committee size and committee polarization suggest that the ideal monetary policy committee may not have many more than five members. It should have a well-defined objective and it should publish the votes of its members. It 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.

Keywords: Committee size, social loafing, groupthink

JEL Classification: E50, E58

Suggested Citation

Sibert, Anne, Central Banking by Committee (April 2006). CEPR Discussion Paper No. 5626, Available at SSRN: https://ssrn.com/abstract=916568

Anne Sibert (Contact Author)

Birkbeck, University of London ( email )

Malet Street
London, WC1E 7HX
United Kingdom
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+44 20 7631 6416 (Fax)

HOME PAGE: http://www.ems.bbk.ac.uk/faculty/sibert/index_html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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