Portal Red Investigadores de Economía

General

I study the policy choices of members of a central bank committee, who are appointed by the government. Central bankers balance their desire to protect the Central Bank's reputation against their interest to be reappointed. Committees can be more successful than single central bankers at reducing inflation and insulating policy from government pressures. These gains are only achieved if the turnover rate of committee members is low and the committee is small. The former is associated with a low risk of being replaced for not supporting the government's preferred policy. The latter, meanwhile, implies high probabiliTY that a single vote affects policy, making any individual member more weary of potentially affecting the Central Bank's reputation through his vote.

Central Bankers in Government Appointed Committees