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Monetary Policy Committees: Comparing Theory and "Inside" Information from MPC Members

Author

Listed:
  • Mikael Apel

    (Sveriges Riksbank)

  • Carl Andreas Claussen

    (Sveriges Riksbank)

  • Petra Lennartsdotter

    (Sveriges Riksbank)

  • Øistein Røisland

    (Norges Bank)

Abstract
How do monetary policy committee (MPC) members form their views about the appropriate level of the interest rate? To what extent do they change their minds during the deliberations in the policy meeting? How important is the chairman? These are issues discussed and analyzed in the literature but so far with limited evidence of how this actually works in practice. We asked former and serving MPC members in Sweden and Norway. The responses confirm a number of theoretical assumptions and predictions, but some results also challenge the conventional view of monetary policymaking by committees. For instance, there seems to be rather limited pooling within the committee; input from the staff is more important than input from other MPC members. Members tend to have decided beforehand how to vote at the policy meeting, and they have a firm idea of what the positions of their colleagues will be. We also find that there is a preference for the status quo regarding institutional features in both central banks, implicitly suggesting that the exact institutional setup is not crucial. One way of interpreting this would be to say that the two central banks have managed to establish processes that, according to the respondents, ensure the quality of policy decisions irrespective of the institutional setup.

Suggested Citation

  • Mikael Apel & Carl Andreas Claussen & Petra Lennartsdotter & Øistein Røisland, 2015. "Monetary Policy Committees: Comparing Theory and "Inside" Information from MPC Members," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 47-89, December.
    • Handle: RePEc:ijc:ijcjou:y:2015:q:5:a:2
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    References listed on IDEAS

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    Cited by:

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    2. Rieder, Kilian, 2022. "Monetary policy decision-making by committee: Why, when and how it can work," European Journal of Political Economy, Elsevier, vol. 72(C).
    3. Alberto Naudon & Andrés Pérez, 2017. "An Overview of Inflation-Targeting Frameworks: Institutional Arrangements, Decision-making, & the Communication of Monetary Policy," Working Papers Central Bank of Chile 811, Central Bank of Chile.
    4. Eichler, Stefan & Lähner, Tom, 2017. "Career experience, political effects, and voting behavior in the Riksbank’s Monetary Policy Committee," Economics Letters, Elsevier, vol. 155(C), pages 55-58.
    5. Hwang, In Do & Lustenberger, Thomas & Rossi, Enzo, 2021. "Does communication influence executives’ opinion of central bank policy?☆," Journal of International Money and Finance, Elsevier, vol. 115(C).
    6. In Do Hwang & Dr. Enzo Rossi, 2020. "Does communication influence executives' opinion of central bank policy?," Working Papers 2020-17, Swiss National Bank.

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    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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