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| Author: | Eslava, M. |
| Title: | Central bankers in government appointed committees |
| Journal: | Journal of Public Economics
2010 : JUN, VOL. 94:5-6, p. 363-379 |
| Index terms: | central banks decision making policy inflation probability reputation |
| Language: | eng |
| Abstract: | I examine the policy choices of a central bank committee members appointed by the government. Central bankers balance their aspiration to protect the Central Bank's reputation against their desire to be reappointed. Committees can be better than single central bankers at reducing inflation and separating policy from government pressures. These benefits are only achieved if the committee is small and the turnover rate of its members is low. The former is connected with a low risk of being replaced because of not supporting the government's preferred policy, while the latter suggests high probability of a single vote affecting policy. This makes any individual member more weary of potentially influencing the Central Bank's reputation through voting. |
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